Australia Post will raise bulk mail prices by up to a whopping 48 per cent from January, fulfilling the worst nightmares of the print and mail industry.
The monopoly mail carrier on Friday applied to the ACCC to increase the cost of a stamp from 70c to $1 from January 4, and ProPrint can exclusively confirm business mail will rise by a similar amount if this request is approved.
Small pre-sort mail, the category most used for bulk mail at 38 per cent of mail volume, will rise by 37.5 per cent for regular service and 48.5 per cent for priority. At $1.08, priority residue mail will cost more than a basic stamp. 70 per cent of presort is sent on regular.
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The new promo post, used for direct mail campaigns, will have a less painful 24.6 per cent hike, but can only be run on the regular timetable. It makes up about 2.8 per cent of mail volume.
Print post, used to send publications, is also not as hard hit, having a nine to eight per cent hike already scheduled for October – priority is up 15 per cent for under 125g and 13 per cent for the rest, with regular small up 13 per cent and the rest 11 per cent.
This is all on top of a 2.8 to 5 per cent hike from October announced earlier this month, which spurred industry panic that Post would use the 42 per cent stamp increase as an excuse for huge bulk mail rises next year. These fears have now been realised.
Australia Post defended the hikes in an email to customers, saying whilst the proposed increases are significant, it is ‘only seeking to recover our costs’.
“For the 15/16 financial year, with a combination of price increase and cost reductions we will still report a large loss,” the email reads.
“These changes are part of our reform program to return the letters service to a sustainable footing through product, price and operational changes.”
Printers and mailhouses are having none of it, predicting catastrophic volume falls and job cuts in responses equal parts outrage, disbelief and resignation.
The Mailing House director Lindsay May, in a letter to Australia post chief executive Ahmed Fahour, says the late direct mail industry champion John Gilroy would be ‘turning in his grave’.
“Thank you for putting the final nail in the coffin of the Direct Mail industry and assigning thousands of jobs to Centerlink,” he says.
“Treasurer Joe will need to tax more than online parcels to recover the GST, Payroll, PAYG and company taxes that will be lost here.”
Lamson Paragon general manager Rodney Frost says the increase is bigger than anything the industry has seen before and puts thousands of jobs in danger.
“Goodbye a billion-plus articles per annum in the first two to three years from this. How do your numbers look at two billion articles or less under this pricing structure?” he says in his own letter to Fahour.
“This is thousands and thousands of jobs Post is playing with here – paper suppliers, envelope suppliers, equipment suppliers, printers, their suppliers, mailing bureaus, their suppliers.
“And then don’t forget the posties and your team. 30 per cent of the capacity there has to go at least in the next three years.
“Say someone gives you a justified and fair price increase of 5-7 per cent, you tweak things to get by, change your communications strategy, become more targeted and reduce volume only slightly.
“That same supplier’s increase is then over 40 per cent. In this postal supplier’s case you simply exit the medium altogether or charge the recipient who then exits for you.”
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D&D Mailing Services director David Docherty says the price hikes will devastate the industry and his business, which employs 120 in Sydney and Melbourne with a turnover of $40m, would have to cut staff due to reduced work.
“The ramifications of these increases will be catastrophic for all of the associated industries that support the production and development of the medium of mail – including mailing houses, printers, paper and machine manufacturers and numerous supporting agencies,” he says.
Anthony Maxwell, owner of Pre Press Pro, a small to medium sized regional mailhouse and print business, fears the hikes will make his business ‘unviable’.
“I know for a fact that a 45 per cent increase postage cost would more than likely drive my major client to look elsewhere for his operations,” he says.
“This would affect the Local PO the regional distribution centre, my employees, Local and other major printers, envelope makers to name a few.”
Australia Post says it is consulting with industry associations such as ADMA and the Fundraising Institute of Australia "to seek advice and discuss relevant opportunities or developments that may impact the mail channel".
It is also commissioning regular research into mail effectiveness and multi-channel interaction, and promoting findings to customers, subscribers and the business community.
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