Freightways blast: NZ Post is failing to deliver

• Author: Brent Melville
• Published date: 23 January 2023
• Publication title: New Zealand Herald, The (Auckland, New Zealand)

His comments come on the back of news that the Government is allowing the state-owned postal service to retain $400 million of the $1.087 billion it received for its 53 per cent stake in Kiwi Group Holdings, owner of Kiwibank and NZ Home Loans, when the Crown took the company over

The Government also bought NZ Super Fund’s 25 per cent stake and ACC’s 22 per cent in a move designed to keep Kiwibank and NZ Home Loans in taxpayers’ hands. The total cost of the Crown’s takeover was $2.1b. Until October 2016, NZ Post owned 100 per cent of the bank.

Finance Minister Grant Robertson said the $400m would help to capitalise the postal service, which had long contended with shrinking mail delivery.

In 2002, NZ Post’s annual letter volumes were 1.1 billion a year. By 2017, that had fallen to less than half that, 514.5 million. The company’s own analysis expects that to continue contracting to about 200 million items over the next few years.

NZ Post chief executive Dave Walsh told BusinessDesk recently that the taxpayer funds will be earmarked for “repositioning” the service into growing its parcel and logistics capability, as well as structural change in its postal services division.

Walsh said the parcel business, by contrast, is expected to double from its current 90 million annual delivery numbers.

But Troughear said the $400m retention is a thinly disguised way of throwing more money at the problem, particularly after NZ Post had already received a capital injection of $280m in 2020 — $150m from the Government’s COVID Response and Recovery Fund and $130m in the national budget for improved mail services.

That was described by the then Associate Minister for State-Owned Enterprises, Shane Jones, as allowing the SOE to remain “commercially viable”.

Troughear, however, said that at a time where the Government is urging restraint and fiscal responsibility, “it would seem that they should either require an adequate return on this capital or not provide it at all”.

NZ stock exchange-listed Freightways shares an estimated 80 per cent of the express parcel market with NZ Post via its flagship New Zealand Courier brand, and other main parcel services SUB60, Post Haste, Castle Parcels, and Kiwi Express. It also competes in the mail business through DX Mail.

Troughear said the Government also seems content to simply shovel more money in rather than fix efficiencies and pricing, which is often below cost.

In that context, he said, investment in the Australian market was...