New Zealand Post is looking at cutting back its delivery services from six days a week to three and reducing staff numbers as it seeks to weather a sharp and "irreversible" downturn in postal revenue.
A letter from New Zealand Post chairman Michael Cullen to State Owned Enterprises Minister Tony Ryall shows the NZ Post board wants to make fundamental changes to core postal operations.
The board is seeking urgent changes to a 1998 deed requiring the state-owned agency to run a six-day-a-week postal service for 95% of New Zealanders.
In his letter to Mr Ryall, Dr Cullen said NZ Post had reached the point where it could no longer cut costs and launch new products to counter falling postal revenue.
NZ Post chief executive Brian Roche told Radio New Zealand the agency was considering cutting deliveries to three days a week.
The service was unsustainable as people increasingly used email for immediate communication, Mr Roche said.
"That's very sad, but it's inescapable."
Reducing the number of delivery days would result in staff cuts, Mr Roche said.
"That's ... incredibly sad, but it's unavoidable."
Dr Cullen said the board had exhausted almost all "short-term fixes" and needed to start making fundamental changes in its operations this year.
NZ Post said mail volumes were expected to drop about 40% to just over 600 million items a year in 2018.
The agency had endured the fastest decline in total mail volumes this year and would start losing money from 2015 if no changes were made, NZ Post spokesman John Tulloch said.
"There is no turning back from this decline. Every developed country in the world is facing year-on-year falls in mail volumes of 5% ..."
Profits from Kiwibank and growing parcel delivery services were offsetting revenue losses from traditional post, but they could not be used to offset postal losses without degrading the business and cutting off investment opportunities, Mr Tulloch said.
"If New Zealand Post did nothing to change its processing and delivery systems, those postal losses would start at $10 million, balloon to over $20 million the next year and keep on growing."
