Possible shake-up for Post Office’s plan to block all courier deliveries under 1kg

Communications minister Mondli Gungubele intends to review the South African Post Office’s monopoly on certain services, including parcel deliveries under 1kg.

In a notice published in the Government Gazette on Monday, Gungubele announced that he intends to review the exclusivity period granted to the Post Office for reserved services.

Gungubele said he wished to consult the public in this regard and gave interested parties until Wednesday, 6 March 2024 (30 calendar days from 5 February) to submit their comments.

“The legislative framework and the licence require the South African Post Office to provide [specific] services universally to every citizen in the country,” Gungubele stated.

“[This is] to ensure that all citizens have equal access to a basic postal service that is reasonably accessible regardless of physical location, at a uniform postage rate and at an affordable price.”

These specially reserved services include:

  • Delivery of all letters, postcards, printed matter, small parcels and other postal articles weighing up to 1kg
  • Issuing of postage stamps
  • Provision of roadside collection and address boxes
  • Provision of retail outlets at which customers can access reserved services

Other than issuing stamps, the financial collapse of the Post Office has resulted in it being unable to fulfil its obligations to provide these essential services.

Before being placed in business rescue, an irate landlord had the Post Office placed under provisional liquidation.

Government quickly applied to the North Gauteng High Court to have provisional liquidation overturned in favour of business rescue proceedings.

The business rescue practitioners who took custody of the Post Office, Anoosh Rooplal and Juanito Damons, soon confirmed that it was hopelessly insolvent.

They said the Post Office’s liabilities had reached R12.5 billion and exceeded its assets by R7.9 billion.

As a result, the Post Office struggled to pay employees’ pension and medical aid contributions and failed to pay rent, causing landlords to shut branches.

Gungubele revealed in response to a Parliamentary question last year that the Post Office closed 314 branches in the past three years — almost a quarter of its network.

Before the Covid–19 pandemic, the Post Office had roughly 1,300 branches nationwide.

Rooplal and Damons later revealed in their business rescue plan that the Post Office had 1,023 branches according to its July 2023 management accounts, of which 113 were profitable.

They said most of the non-profitable branches are related to the Post Office’s universal service obligations.

“The branches are split between 448 rural branches and 575 urban branches.”

129 branches were non-operational for various reasons.

To save the Post Office, the Business Rescue Plan has proposed axing 6,000 staff and slashing its branch footprint to 600 outlets.

Before being placed in liquidation, the Post Office had announced its ambition to enforce the law that gave it exclusivity over parcel deliveries under 1kg.

The fight over the delivery of packages under 1kg started in 2018 when the SA Post Office lodged a complaint against Postnet for delivering packages under 1kg.

In 2019, Icasa’s Complaints and Compliance Commission ruled that Postnet had contravened the Postal Services Act by transporting and delivering packages under one kilogram.

The SA Post Office also confirmed that the law, and therefore the ruling, applies to all courier companies operating in South Africa.

Postnet and the South African Express Parcel Association fought the ruling, arguing that the SA Post Office’s interpretation of the law is wrong, as it only applies to postal services and not couriers.

The Post Office’s true rent-seeking intentions were revealed later.

It wanted courier companies to register as agents of the Post Office to deliver packages.

Private couriers must then pay an “agency fee” for the privilege of delivering parcels that weigh less than a kilogram.

It remains to be seen whether Minister Gungubele wants to continue trying to enforce a monopoly for the Post Office after the fact to help shore up its finances or end the legal tangle once and for all.

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Possible shake-up for Post Office’s plan to block all courier deliveries under 1kg