/ 14 February 2020

Competitors take on the post office

Post Office Strike
Mail maze: The South African Post Office says that only a tiny percentage of its 2-million daily parcels go missing or are damaged. (Oupa Nkosi)

The South African Post Office (Sapo) says only 0.01% of its 2-million daily deliveries are lost or damaged. This is despite horror stories of missing parcels, stolen items and lost letters to loved ones being posted on every available social media platform. 

Citing poor service at Sapo, readers have told the Mail & Guardian about their choice of alternatives — from courier services to retailers.

That competition could soon be strengthened, with private postal company PostNet taking Sapo to court over the old Postal Services Act that it says creates a monopoly for the state postal service to courier parcels smaller than 1kg.

The Act, dating back to 1998, has given the post office an upper hand for years and PostNet wants it to be re-examined. The company has sent an affidavit to the Pretoria high court, calling the post office’s exclusive mandate to send certain parcels, “monopolistic”.

These smaller parcels include passports, mobile phone and bank cards.

The court case comes after Sapo lodged a complaint in January 2017 that PostNet was in breach of the Act. Last October, the Independent Communications Authority of South Africa (Icasa) sent PostNet a desist order for contravening the Act. PostNet and other courier companies are excluded from sending goods specified under the Act.

Chris Wheeler, PostNet’s managing director, says they are not contravening the law because they are sending a courier product and not a mail product. “We do not move mail. The mail must be moved by the South African Post Office. If you are an individual, a business and you purchased something online, the person must have the opportunity to make her own choice.”

He said the difference between the two is that postal products are more affordable. Courier products are time sensitive, can cost more and there is a track and trace option.

He added: “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.”

The post office had not responded to a request for comment on the case at the time of publication.

The court’s decision on this might guarantee the post office’s monopoly, or it could take away yet another income stream from the struggling state-owned entity.

As the post office battles its many woes, opportunities have arisen for companies to offer a solution.

One such entrant is Paxi, run by Pep, which allows its customers, institutions and businesses to send, collect, and return parcels. Pep makes this possible by leveraging its large footprint of 2000 stores and its internal logistics and transport services.

“There was a gap in the market for an affordable, reliable parcel service. With the post office strikes in the past it affected consumer’s parcel deliveries,” said Pep’s Bronwyn Arendse .

Since starting in 2018, Paxi has sent more than a million parcels. Arendse said about 117000 parcels are sent by consumers and small businesses every month.

The service has three types of delivery options customers can choose from. The shorter delivery time a person chooses, the more money they pay. The cheapest is R49.95.

Pick n Pay has a similar service, Aramex. Shoppers can buy an Aramex sleeve at stores, complete a form and insert the parcel inside the sleeve and seal it.

The parcel is delivered by 12pm the next business day (if dropped off before 3pm). Delivery to outlying areas take up to 72 hours. This service costs just R99.99.

Head of value added services at Pick n Pay, Fanus Smit, said it’s usually a mix of small businesses and individuals that use this service.

Entrepreneur Celokuhle Ntlatseng, who has given Paxi her stamp of approval, said: “The post office has a negative reputation, such as strikes and other things, and because of that, it was not an option. And it’s bad because my post office is five minutes away from my house and I have to drive out and look for a Pep.”

(John McCan/M&G)

Ntlatseng started her company, Mwanga_byceli, a year ago and sells wellness products such as incense and Himalayan salts. Her cheapest product retails at R120 and she adds Paxi’s delivery price on to the cost.

She uses Paxi because her customer base has grown from Johannesburg to destinations around the country.

“I found that Paxi’s system has a delivery price that is affordable for most. I thought it was a cheaper alternative to all the other courier services,” she said.

Ntlatseng’s negative views of the post office are shared by many of those the M&G spoke to.

But, despite people’s concerns, the post office reckons that it is on top of things.

In response to questions, it said: “The post office conformance to delivery standards is steadily improving.”

It added that the postal service is vital to many small and medium businesses that export items to other countries, because it offers the most affordable international service and delivers to 192 countries.

Sapo said its delivery conformance is currently 86.7%, against a regulated standard of 92% with regards to items reaching customers on time. Their conformance is consistently improving because of the deployment of the necessary physical and information technology resources that were previously unavailable, it said.

“The postal service delivers more than 2-million items daily and our recorded volumes of damaged or lost items is below 0.01%,” it said.

Sapo’s new board members at the progress report meeting that took place in Parliament last November, however, acknowledged that the company has seen hard times.

“The post office is emerging from a long winter,” said board chairperson Tshikani Makhubele.

“Sapo had previously not been performing well, its investment is under threat and its sustainability is under question,” she said.

She added that the company needs to revive its public image, address its performance challenges and re-examine its outdated business model.

A new board was elected at the end of October last year after Communication and Digital Technologies Minister Stella Ndabeni-Abrahams opted not to extend the previous members’ terms. In the meeting it was also revealed that Sapo has not been profitable over the past 13 years — with the exception of 2006 when a profit of R276-million was made.

The 2019 annual report shows that mail revenues continued to decrease mainly because of the declines in volumes which Sapo attributes to global mail business trends.

The report also showed that mail revenue declined by 8%, but still contributes 52.1% of the total group revenue. In the report, Sapo’s group acting chief executive Jabulani Dlamuka, warned: “Sapo is operating at a net loss. Without profitability, Sapo will end up continually depleting its assets.”

On Monday, Sapo suspended its former acting chief executive Lindiwe Kwele , after being at the helm for four months. Business Day reported that Kwele’s suspension happened in December last year.

Kwele took over the running of the post office in August 2019, after the resignation of Mark Barnes.

Kwele’s lawyer, advocate Eric Mabuza, is challenging the decision and the matter has been referred to arbitration.

For the beleaguered post office, this is yet another blow.

Tshegofatso Mathe is an Adamela Trust business reporter at the M&G