A test for the postal system

Is it the end of mail delivery as we know it?

NIKKI MCDONALD
Last updated 05:00 24/05/2014
NZ Post Buggy
ROBERT KITCHIN/FAIRFAX NZ

Electric buggies such as this one being trialled by Chris Lake could replace the old postie's bike as part of the ongoing shake-up of NZ Post.

Coleen Williamson
UPDATING TECHNOLOGY: Coleen Williamson, right, and her Canadian friend Ingrid van Tamelen met through letters but have moved on to Skype.
Ashley Smout
UNSHAKABLY BULLISH: Ashley Smout, NZ Post's chief executive operating officer of mail and communications, believes parcels will save NZ Post.

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New Zealand Post will deliver about 70 million fewer letters this year. As it radically reforms to save the dying mail business, Nikki Macdonald repeats a 2007 experiment to test delivery reliability, and asks if the mail will make it through. 

Middlemarch, 1953. Quiet, dusty, and a very long way from Canada. Coleen Williamson was 13 and looking for friendship in the Otago town now famous for its annual gathering of the lonely, the singles ball.

From the list of prospective penpals in People's Friend magazine, she chose one in Scotland and one in Canada.

The Scot fell by the wayside, but after 61 years she's so close to Ingrid from Canada that they unconsciously mimic each other's body language.

For the first 53 years the pair wrote six letters a year and exchanged Christmas, Easter and birthday cards. In around 2006, they switched to email, seduced by its immediacy. This month they Skyped for the first time.

"We Skyped for an hour. You can see if they're well, sick, bubbling over. You hide such a lot in your letters," says Williamson.

The 73-year-old, now living in Dunedin, still loves to get letters and relies on the post to pay accounts by cheque, and send birthday and sympathy cards. But postage is getting dear, and it's about to go up again in July.

She hopes mail will still pop through the slot in another 10 years.

"But it might be a hopeless hope."

"It's through the post that we've got this wonderful friendship."

Williamson's story perfectly reflects the bigger picture. When Stuff investigated the future of the postal service seven years ago, the mail business remained resilient.

Since then mail volumes have been in freefall as even older Kiwis abandon letters in favour of email or Skype, as bill payments and account statements move online and as social media opens up cheap and effective ways to thrust products in front of potential buyers.

New Zealand Post has finally confronted the inevitable, announcing plans to cut home delivery from six days to three from July next year, and halving the number of major processing centres nationwide. With the changes will go 1500 to 2000 jobs.

But is too late to save snail mail?

The figures are dire. Last year, mail volumes fell 7.5 per cent, the most dramatic decline yet. This year looks closer to 10 per cent.

That's about 70 million fewer letters being delivered a year. Over the next five years, New Zealand Post expects the volume of mail to halve again.

FastPost looks even worse. From 1998 to 2011/12, FastPost volumes dropped from 46 million letters to 8.2 million. And that's hardly surprising, if Your Weekend's delivery experiment is any gauge of its reliability.

In 2007, all but two of the letters sent around the country by FastPost arrived the next day, as promised. This time only half were delivered on time, with the rest mostly arriving with those sent by ordinary post.

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One FastPost letter took two days to travel 7.5km across town from the Wellington CBD post box to its South Coast destination. Another took three days to reach Palmerston North from Wellington and another took four days to arrive at a Blenheim PO Box.

Everyone has their mail horror story - one reader claimed Trade Me closed his account after a buyer complained a parcel he sent from Porirua to Auckland had not arrived three weeks later. A magazine subscriber was astonished when his regular read took less time to reach his temporary home in England than it usually takes from Auckland to Wellington.

Our experiment showed ordinary post has also slowed, with eight letters arriving a day later than in 2007 and just one speeding up. That trend will worsen as NZ Post consolidates its 50 mail processing sites into three mail centres, meaning ordinary mail sent across town anywhere outside Auckland, Christchurch and Palmerston North will have to travel to those centres to be sorted.

New Zealand Post last year extended across-town delivery targets from one day to three days in anticipation of the inevitable delays. (FastPost, across-town mail will still be sorted locally).

Ashley Smout, New Zealand Post chief operating officer of mail and communications, acknowledges "challenges" with FastPost delivery over the past few months.

He also concedes that, as the company closes three of its six major mail centres, processing must improve to meet even the three-day target. Fail and they risk hastening the decline still further.

When the internet became widely accessible a quarter century ago, few could have imagined its far-reaching impact. Mail volumes have been in accelerating decline since communications became instant, global and free.

While the abandonment of mail by everyone from savvy students to granny letter writers has hurt, it's the withdrawal of the big spender, big senders that is really killing the mail business.

Remember when you used to get bank statements in your mailbox and bills piled up on the table ready for payment? Now, online is the default option and you have to opt in to receive paper statements.

And why pay for costly mailouts to prospective customers when you can reach them for free by email, Facebook or Twitter?

Seven years ago Business New Zealand chief executive Phil O'Reilly said physical mail remained "critical" for business. Today, he says it's a useful alternative to digital communications, and a good way to deliver things sold online.

"I think businesses still value it, but I wouldn't describe it as vital."

The unshakably bullish Smout expects businesses will continue to use mail for direct marketing, but he expects "transactional mail" - those bills - to dry up completely.

Right now, in The Sound of Music tradition, Smout's favourite things are brown paper packages tied up with string. Parcels, he believes, will save New Zealand Post.

The small-package business is burgeoning - fuelled by ever-growing numbers of Kiwis buying stuff online - but its numbers will never replace the loss of letters. Parcel volumes are expected to increase by 10 million over the next five years, while letter volumes will fall by 252 million.

However, parcels are money spinners. If you combine New Zealand Post's mail and courier business, parcel earnings will outstrip mail earnings in the next one to two years, Smout says.

A deal announced earlier this year to deliver for Dick Smith electronics could be the first of many.

"Parcels are the future of this business."

But will it be enough? Paired with radical changes to every step of the postal journey, Smout is adamant the reforms will ensure the mail will get through.

First up are those processing changes. Smaller provincial processing centres - such as those in Napier, Whangarei and Masterton - are already being consolidated, with some job losses or job changes. The big hit, though, will come when Wellington, Waikato and Dunedin mail centres close.

Dunedin's processing moves to Christchurch, Waikato's will move to Auckland in September or October, and Wellington's processing will shift to Manawatu in March or April next year.

The way you buy stamps and access other postal services, such as bill payments and car registrations, will also change.

New Zealand Post is keen to move away from owning post shops, preferring a cheaper mix of self-service kiosks, franchises and postal services in other shops and supermarkets.

Faceless kiosks aren't a silver bullet solution, Smout assures. They need high traffic to pay their way, so will mostly appear in so-called "corporate" stores, such as the North Shore post shop where they have been trialled.

But perhaps the biggest change for the average Kiwi will be the halving of six-day deliveries to alternate days, which New Zealand Post negotiated last year.

For now, rural areas retain five-day delivery, following pleas from residents who rely on the mail delivery for other necessities such as daily newspapers and groceries.

The delivery changes will be rolled out from July next year, but exactly how is yet to be determined, Smout says. It won't be a one-size-fits-all model because different areas will have different needs - a new subdivision with rapid growth and high parcel delivery will need a different formula to an established suburb.

And they still have to work out how to accommodate FastPost. Despite the decline in Kiwis relying on mail for speedy communication, New Zealand Post has to offer next-day delivery as part of its international agreements.

In the race to save snail mail, nothing is sacred, including the long tradition of posties slung with panniers delivering mail on foot.

New Zealand Post is trialling electric bikes and motor scooters to give posties more flexibility to carry heavier loads. In Tauranga, posties trialled delivering both mail and courier parcels.

Urban areas are dense enough to support both courier and mail runs, and rural areas already have combined delivery - the tricky bit, says Smout, is the suburban neighbourhoods in between.

In Belgium, posties are experimenting with delivering everything from dry cleaning to medications.

Innovation might also change the picture - if a trial of parcel collection system ParcelPod takes off, parcel pick-up might reduce the need for home delivery.

With the drastic changes will come drastic job cuts, but even the unions seem resigned to the inevitable. Who will be cut, and where, will depend on the needs of each area and that won't become clear until later this year, Smout says.

In the meantime, everyone from posties to mail centre workers - some who have worked there for decades - can take modules such as CV writing to prepare them for the job market.

Grey Power, too, is muted in its concern at the demise of the older generation's communication lifeline. National president Terry King would "feel dreadful" if he couldn't receive birthday cards through the post.

"It's a habit, isn't it, a lifetime of doing something."

However, asked if he uses the mail to catch up with friends and family, he sounds surprised at the question.

"Oh, no. I use Skype for that."

Nonetheless he worries that those older than his 73 years still rely on the mail, and increasing stamp costs are pushing it out of reach. In July, the price of an ordinary letter will go up again, from 70c to 80c.

According to Smout, for every 10c rise about 2c to 3c evaporates in lost sales as senders balk at the price.

Despite all the uncertainty, Smout is convinced New Zealand Post will emerge from the changes stronger and better.

See you in another seven years to find out if he's right.

GETTING SORTED

Over the next 18 months more than 50 mail processing sites will be consolidated to three centres, in Christchurch, Manawatu and Auckland. To illustrate the impact of closing the three other metropolitan processing centres (Wellington, Hamilton, Dunedin) we track the journeys of three ordinary mail letters, before and after the changes.

Ordinary mail sent from Wellington CBD to Wellington suburb

Before: Mail aggregated at hubs and transported to Wellington Mail Centre in batches during the day. There it's sorted, combined with mail from out of town and dispatched to delivery branches and box lobbies for final sort and delivery.

After: Mail aggregated at Wellington hub and trucked to Manawatu mail centre, where it's sorted down to postie round and then sent back to the Wellington distribution hub. From there it's distributed to the appropriate Wellington delivery branch, where it's sequenced into street order for delivery.

Ordinary mail sent from Hamilton to Wellington

Before: Letter processed in Waikato Mail Centre in Hamilton and trucked to Wellington Mail Centre for sorting. Then transported to delivery branch or Box Lobby for final sort and delivery.

After: Mail aggregated at Hamilton hub and sent to Auckland for national sort. It's then forwarded to Manawatu to be sorted down to postie round, delivered to Wellington distribution hub, where mail will be distributed to delivery area to be sequenced into street order.

Ordinary mail sent from Blenheim to Christchurch

Before: Mail sorted at Blenheim Mail Centre and driven to Christchurch Mail Centre where it's sorted again down to postie rounds.

After: No change, except Blenheim Mail Centre becomes the slightly smaller Blenheim hub.

WINDOW ON THE PAST

Some parcelled their experiences up with ribbons of false cheerfulness, to keep the terrible truth tightly bound. Others built and tore down relationships with an inky flourish.

Private Leonard Hart told his parents of the "utter desolation caused by modern shell fire" and "our own men getting cut to pieces in dozens by our own guns".

Captain Alexander McColl assured his dearest mother his men "trained like fighting cocks" would prevail against the Huns. He was excited about the house improvements she had mentioned in her letters, but he never got to see them, as he died the next day.

Personal letters, says Ministry of Culture and Heritage senior historian Imelda Bargas, help flesh out dry official records. That's particularly apparent as historians delve into World War I material to commemorate the conflict's centenary.

"It would be quite a different record if we didn't have that - you would be missing the insight into what it was really like for the guys there. Or at least, what they were telling their families it was like."

So what happens if those insights squirreled in shoe boxes become emails on obsolete technology, or, worse still, Skype conversations that disappear forever the second those chatting log off?

Bargas predicts the challenges of digital communications will be comparable, but different. Now, historians struggle to decipher handwriting and to preserve brittle paper. In the future archivists will have to constantly update digital files as technology formats shift.

Deliberate efforts will be needed to preserve digital communications, as opposed to letters' chance survival. Bargas, a Cantabrian, extracted her text message exchanges following the Christchurch earthquakes.

The period with the greatest social blanks is likely to be the pre-internet 1980s, when Kiwis ditched letters for long chats as phone companies offered cheap calls to Australia and England.

On the upside, however, digital conversations could convey broader perspectives, as letters tend to be written by the highly literate. The challenge will be to capture them.

- The Dominion Post

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