Businesses step up as South Africa’s oldest company collapses

The South African Post Office has been on a downward spiral for many years. In September 2023, the entity was declared insolvent, and the Communications Workers Union recently warned that it was days away from closing its doors.

However, private businesses in South Africa have stepped up. They offer a broad range of affordable courier services as the Post Office, the country’s oldest state-owned company, fights to survive.

In a recent interview, the Communications Workers Union’s (CWU) national bargaining coordinator, Nathan Bowers, said the Post Office could be forced to shut down at the end of February 2025 if it doesn’t receive R3.8 billion in government funding.

“A few days ago, the business rescue practitioners told us that the R3.8 billion is not forthcoming and that the operations and the workers’ salaries are being placed in jeopardy,” he said.

“In the meantime, while there is dithering here and dithering there, the Sapo workers and their families are being placed into a state of panic.”

In response to these concerns, communications minister Solly Malatsi’s spokesperson said they have engaged National Treasury to reallocate unused SITA SA Connect funds to the Post Office.

However, Malatsi warned that although this would provide short-term relief, it was not a lasting solution.

“The reality is that the Department of Communications and Digital Technologies budget simply cannot sustain repeated bailouts,” said ministry spokesperson Kwena Moloto.

The state-owned entity was placed into business rescue in 2023, with business rescue practitioners Anoosh Rooplal and Juanito Damons appointed to formulate a rescue plan.

Post Office stakeholders adopted the plan in December 2023.

It received a bailout of R2.4 billion after being placed into business rescue and used the funds to settle debts, pay salaries and severance packages, and cover operational costs.

Rooplal and Damons’ business rescue plan involved retrenching large numbers of employees. In September 2024, it was revealed that 4,875 people had been retrenched from a staff complement of 11,083.

The Post Office was also to shut 366 branches, leaving just 657 nationwide.

Despite these measures and the Post Office significantly reducing its debt, the business rescue practitioners warned that the entity would reach day zero on 30 October 2024 if it didn’t receive the additional R3.8 billion in funding.

While it is still operating, Communications Minister Solly Malatsi is considering partly privatising the Post Office to modernise its operations and increase its competitiveness.

Meanwhile, those who don’t trust or are unwilling to use the South African Post Office services have several affordable alternatives from which to choose.

These include store-to-door, door-to-locker, locker-to-locker, door-to-door, and point-to-point delivery services.

Companies like Aramex, Bob Box, Pargo, Paxi, PostNet, and Pudo offer these kinds of services, to name a few.

Aramex offers a nationwide store-to-door delivery service priced at R99.99, regardless of package size.

“It is the ideal option for sending documents, parcels and gifts throughout South Africa. It is also the ideal way to get your e-commerce business booming with our extensive delivery network,” the company said.

Its store-to-door drop boxes are situated in Pick n Pay, Checkers, and Fresh Stop stores across South Africa.

Relatively new and popular courier services include door-to-locker and locker-to-locker, like those offered by players such as Bob Box, Easy Collect & Drop, and Pudo.

Bob Group-owned Bob Box offers door-to-locker courier services through its network of IoT-powered smart lockers.

It offers the service in several metros in Gauteng, KwaZulu-Natal, the Western Cape, and the Eastern Cape. It is also pushing the offering into informal settlements in the country.

Easy Collect & Drop offers locker-to-locker courier services through its network of smart lockers, as well as point-to-door and door-to-door services.

Through its locker-to-locker service, users can drop a package and secure it in one of the company’s smart lockers. Easy Collect & Drop will then courier it to another locker near the recipient’s location, where they can collect it with a code.

By extension, customers can also secure parcels in a locker for Easy Collect & Drop to courier them to the recipient’s door.

Pudo follows a similar model to Bob Box and ECD, with a network of smart lockers service as secure pickup and drop-off points nationwide.

Companies like Pargo, Paxi, and PostNet don’t use smart lockers for their services and instead offer more traditional courier services.

Pargo works on a point-to-point basis, where it will collect a package from a customer to courier it and hold it at a partner retailer, such as Clicks, for the recipient to collect.

It has more than 4,000 collection locations nationwide, and some of them are open 24/7.

Paxi works on a similar model. However, it partners with PEP to offer its drop and collection points.

PostNet offers traditional courier services similar to those offered by the South African Post Office, where customers can take their parcels to PostNet branches and choose from a wide range of domestic and international courier services.