SA Post Office lawsuit could be a disaster for South Africa

There is an ongoing battle between the SA Post Office (SAPO) and courier companies in South Africa, which could prove disastrous for local businesses.

The Post Office wants to prevent private courier companies from delivering any packages under 1kg, and its efforts have been backed up by the Independent Communications Authority of South Africa (ICASA).

ICASA is the postal service regulator in South Africa, as well as the regulator for the telecommunications and broadcasting industries.

This conflict started in October 2019, when ICASA sent PostNet a cease-and-desist order for violating the Postal Services Act 124 of 1998.

Postal Services Act and PostNet

The Postal Services Act states that only a licenced postal services operator may render services defined as reserved postal services.

Reserved postal services include all letters, postcards, printed matter, small parcels, and other postal articles up to and including 1kg.

The Post Office is the sole entity which may render these reserved postal services in South Africa, and it subsequently lodged a complaint with ICASA against courier companies, which it said were contravening this rule.

ICASA’s Complaints and Compliance Committee (CCC) said the Postal Services Act has created a monopoly in favour of the SA Post Office, and that the 1kg and less limitation is constitutionally justifiable.

“The monopoly is clearly intended to place SAPO in a financial position to widen the availability of postal services throughout the country,” the CCC said.

PostNet has subsequently been engaged in a court battle with ICASA over the ruling that it must stop delivering parcels less than 1kg.

Earlier this year, PostNet managing director Chris Wheeler told the Mail and Guardian that PostNet did not move mail – they were a courier service.

“The mail must be moved by the South African Post Office,” Wheeler said.

“If you are an individual, a business, and you purchased something online, the person must have the opportunity to make her own choice.”

“It’s another failing parastatal that is trying to use an old piece of legislation that is badly worded to try and get back revenue,” he said.

Potential logistics disaster

This ruling affects all private courier companies, and therefore the South African Express Parcel Association (SAEPA) is also involved in the battle against SAPO.

MyBroadband asked SAEPA for comment, but the organisation said the matter was sub-judice and it would not be able to offer feedback.

One of the biggest potential problems with the Post Office being the sole conveyor of articles below 1kg is the effect of this ruling on ecommerce and logistics.

In addition to facilitating the delivery of online purchases to customers, private courier companies are also used to deliver goods between warehouses and branches in various industries, including the pharmaceutical and motoring sectors.

Many of these businesses depend on the same-day delivery of these goods to complete orders, a service which private courier companies offer.

The Post Office takes much longer to deliver packages, however, and many companies prefer the reliability and quality of service provided by private couriers.

To assess the impact, MyBroadband asked Wootware founder Rory Magee whether many of the company’s sales comprised parcels below 1kg.

“Many parcels may be under this limit. However, it would be trivial, albeit wasteful, to make a parcel heavier – add more packaging material/void-fill,” Magee said.

When asked about his position on being forced to use the Post Office for sub-1kg deliveries, Magee said he would be unhappy with this arrangement.

“I wouldn’t be comfortable with any entity that discourages free-market competition in order to force others to do business with them,” he said.

“It would be akin to Telkom forcing customers back onto ADSL.”

Postal services

The SA Post Office said that in terms of the Postal Services Act 124 of 1998, only a licenced postal services operator may render services defined as reserved postal services in the Act.

“The SA Post Office is the only licenced postal services operator in South Africa,” it said.

MyBroadband asked ICASA for comment on this issue, but it did not respond.

Now read: SA Post Office’s new ecommerce platform – All the details

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SA Post Office lawsuit could be a disaster for South Africa