Parcel delivery times could double if the Post Office’s monopoly ambitions succeed
- The South African Post Office says it has exclusive rights to deliver parcels weighing 1kg or less.
- This interpretation was supported by the Independent Communication Authority, which will defend its position before a High Court review.
- If the Post Office is successful in its bid, South Africa’s R20 billion private courier industry will be devastated.
- And South Africans awaiting parcels will need to endure longer delivery times.
- For more stories, go to www.BusinessInsider.co.za.
The South African Post Office (Sapo) wants to monopolise the delivery of parcels weighing 1kg and under. If it succeeds in side-lining private courier companies from distributing small items, South Africans can expect average delivery times to double.
A massive shakeup in South Africa’s courier, express, and parcel (CEP) industry – estimated to be worth approximately R20 billion – is brewing. The renewed fight stems from a complaint laid by Sapo in 2018, wherein the embattled state-owned enterprise argued that private courier company, PostNet, was in contravention of the Postal Services Act.
This Act regulates the operation of Unreserved Postal Services (UPS) which applies to all private courier companies in South Africa. Sapo is the only licensed Reserved Postal Services (RPS) operator and argues that, under the Postal Services Act, it should have exclusive rights to deliver items which weigh 1kg or less.
The Independent Communication Authority of South Africa’s Complaints and Compliance Committee (ICASA CCC) ruled in favour of Sapo and ordered that PostNet cease delivering small parcels by March 2020.
PostNet obtained an interdict from the High Court, halting the order just two weeks before it was due to come into effect, which has allowed private courier companies to continue delivering packages weighing 1kg or less.
A review of Sapo’s interpretation of the Postal Service Act – now supported by the South African Express Parcel Association (Saepa), which represents companies like FedEx, DHL, UPS, and RAM – has been lodged with the High Court.
Both Sapo and Icasa are challenging this review, with the latter filing papers in defence of its original interpretation of the Postal Service Act.
And while a ruling in favour of Sapo and Icasa would have devastating financial consequences for private courier companies, South Africans delivering and receiving small parcels will also be affected.
The Post Office is commercially insolvent and incurred losses of almost R1.8 billion last year. The last time Sapo made a profit was in 2006. It also owes R1.8 billion in rental arrears and has been forced to close more than 50 of its offices. Of the 1,416 operational post office branches only 55 are profitable.
"Indeed, (the) SA Post Office's major challenges in the recent past, are well documented," said Nomkhita Mona the Group CEO of Sapo, in response to a scathing report by the Auditor-General.
"These have come about as a result of a number of factors – both exogenous and endogenous – including an obsolete business model. These were exacerbated by the advent of the Covid-19 pandemic."
This has raised serious concerns around Sapo's ability to meet the demand of monopolising the delivery of items weighing 1kg or less.
At the time of publication, Sapo had approximately 4.8 million items which were awaiting delivery. Most of these outstanding items are from international sources, according to a Sapo representative who spoke to Business Insider South Africa.
"The Post Office delivers an average of a million items per day, making this a five-day total," explained Sapo.
"We expect to significantly reduce this volume within weeks, having introduced a campaign to clear all mail on hand… we have already cleared the inland sorting centres with only international items requiring attention."
And while the Post Office says it has the ability to clear outstanding backlogs within a week, its average delivery times are already significantly longer than those offered by private courier companies.
"Domestic items are delivered within an average of six work days, and international items within ten days," Sapo told Business Insider SA.
"The processing and delivery of international items is compounded by arrival of aircraft operating outside normal schedules owing to international travel restrictions. In April, for example, the Post Office was receiving mail dated February and March 2021 from abroad."
Sapo also said that load shedding had caused delays at its international sorting centre in Johannesburg.
Private courier delivery times, like the PostNet-to-Postnet service, are generally completed within two to three working day, less than half the average time noted by Sapo. This also extends to international deliveries, with non-express options – like UPS’ Expedited Shipping or Express Saver services – taking no longer than six days to complete.
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