As the 13 per cent bulk mail price hike comes into effect this week, the printing and mailing industries are fighting back to prevent another cost shock that could bring direct mail to its knees.

PIAA chief executive Bill Healey and other industry heavyweights from companies like Blue Star and Computershare, plus numerous mail house owners, are seeking to open a productive dialogue with Australia Post to discuss the way forward, and are meeting with Communications Minister Malcolm Turnbull to voice their concerns.

Healey says communication between industry and the national mail carrier has been sparse in recent years, with Australia Post rarely doing more than announcing price rises.

“They don’t call us to consult, just to say the price is going up. They’ve lost touch with the market – they have to be out there listening to their customers and working with them,” he says.

“The polarisation needs to stop. The issues won’t be solved by throwing rocks at each other.”

Healey says senior Australia Post executives are starting to acknowledge they’ve dropped the ball on dialogue and would like to improve it.

“However, its commercial priorities will always dictate its action,” he says.

[Related: More Australia Post news]

Healey says topics of discussion with Turnbull include reinstating the requirement for Australia Post to run bulk mail price changes by the ACCC, increasing the stamp price beyond 70c to make bulk mail more competitive and the government’s inquiry into state-owned enterprise.

“There is an opportunity to set benchmarks for how Australia Post can become more efficient,” he says.

However, Healey is concerned Australia Post’s projected losses in its letters division in its next report will discourage the government from taking significant action, especially as Turnbull is pro-digital mailboxes.

He is asking PIAA members to submit suggestions on how Australia Post can improve its operations, so they can be put to the mail carrier in future sit-down meetings.

“We have to rally together, so we know what printers are facing and what can be done about it, and come up with a plan, so we can implement it, rather than just talk,” he says.

Active Mail managing director Luke Pearsall says the national mail carrier is so bad at communicating with customers, it took four months to get in touch with his mail house’s new representative.

“It was just ridiculous, Australia Post has only 100 mail house customers and he only had 30 to deal with, it shouldn’t be hard to keep up with them. We spend $1m with it and we get no communication,” he says.

“Prices have just gone up and there’s been no notification, no communication, nothing at all. It can say all it likes that it is working with its customers, but it isn’t.

“It’s like David and Goliath, it can do whatever it wants – no collaboration or consultation, just ultimatum.”

Pearsall says Australia Post needs to work to improve its operations, not just slug customers with a huge price hike to cover costs.

“There’s too many trucks out there with not enough parcels in them and it hasn’t bothered to rethink its pickup schedules,” he says.

“We might get one truck show up just to pick up one cage and that’s it. There’s no consolidation because it’s too heavily unionised and can’t downsize its workforce.

“Why should we have to suffer because it can’t deal with its unions? Then it has the gall to be draconian with its invoice enforcement – just one day late and you’re suspended.

“It’s terrible, considering what the industry spends on direct mail, we are not being treated like valued suppliers as we should be.

“It needs to be run properly, not like a bank, which is how the bloke at the top is doing it.”

Horizon Print Management general manager Stuart Page says his company does more than 40 million articles of direct mail and distribution with Australia Post and he would like to see a realistic long-term solution come out of talks with the industry.

“It’s a bit of a dictatorship and it’s hard to negotiate with. I’d like to see some understanding of what the industry is going through,” he says.

“Australia Post has lots of inefficiencies but is so unionised it’s hard to make the necessary changes to make its letters business commercially viable.”

The PIAA’s Priorities for Print says: “The industry believes Australia Post does not give significant recognition in its pricing to the savings and other benefits that are derived from the process improvements introduced by mailing houses.”

“These efficiency dividends should be recognised in a more transparent process in the determination of bulk mail price.”

[Related: More PIAA news]

Healey says it is difficult to tell exactly where Australia Post can improve its business and what exactly is going wrong because it refuses to publish its costing structures and is exempt from freedom of information requests.

“Yes there’s been a decline in transactional mail but that’s due to a desire from companies to take bills online to save money. Direct mail is doing well,” he says.

Pearsall agrees: “Transactional and essential mail is dying for sure. But direct mail was increasing before these price rises came in – they need to stop stifling it,” he says.

“Direct mail is coming back. People, who I wouldn’t have expected to, are coming to me asking to do more of it.

“Volume will now be decreased in an industry that was just starting to pick up in a big way. It’s like they’re deliberately trying to crush letters.”

Healey says Australia Post must also be prevented from competing against its own customers – starting up printing and mail house services.

“Australia Post is increasingly competing with a number of businesses in the production and distribution of printed material,” Priorities for Print says.

“The industry does not believe that this can be undertaken without breeching Australia Post’s competitive neutrality obligations.”

Healey says Australia Post’s profitable parcel business was built on the back of its position as a statutory monopoly for mail delivery, allowed it to establish a wide distribution network.

“Perhaps that should be built into parcels costs and transferred into mail,” he says.

“I question whether this is being taken into account at all, but it’s impossible to tell because it won’t release its costing structures.”

Healey says we are already starting to see the long-term ramifications of constant, significant cost increases, with direct mail advertisers going online to cut costs.

“It doesn’t help when you have senior Australia Post executives questioning the viability of print,” he says.

Cliff Lewis Printing sales general manager Matt Lewis says the price increases are making his clients think about going online or cutting volumes, with some already leaving or cutting their campaigns from monthly to quarterly.

“It’s ridiculous and will drive advertisers into other mediums,” he says.

[Related: More direct mail news]

Everyone is in agreement that the industry needs to take a stand or things will continue to get worse and the whole future of direct mailing could be in jeopardy.

Lewis says: “It’s just going to keep getting worse, the industry is already on a knife-edge but I think Australia Post will do anything to increase revenue so no doubt it will raise prices again,” he says.

“If it could just keep bulk mail prices down it would get more profit from increasing use of direct mail.”

Pearsall says, if the industry doesn’t do something, it will be in the same position next year looking at another double-digit price rise.

“It’s barbaric. It’s almost not worth being in direct mail anymore,” he says.

“How long do you think it will be before cheap overseas mail services are able to bypass Australia Post completely? Then where will we be?”

Page says as a government organisation, Australia Post doesn’t understand business as much as it could and needs to have realistic discussions and consideration about what the industry is facing.

“It’s a bit scary to think in five years’ time we might not be in this business anymore,” he says.

“It won’t be worth it anymore, businesses won’t think direct mail is cost effective.

“We need to take a stand. Every year the rates go up so we have to do something.”

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