Postal services

Much like public transport, telecommunication and electricity distribution networks, the "last-mile" of postal distribution networks is the most critical, but most expensive and often the "weakest link".

Initially people thought the growth of on-line shopping would reduce traffic congestion, as people stayed at home instead of driving to shops. However, to achieve a net reduction in traffic (& delivery costs), you need large scale efficiencies so trucks can make many home deliveries in one run.

But I'm not sure this is happening. Personally, it drives me nuts when companies like FedEx repeatedly deliver a parcel when I'm out, and make it hard to arrange any alternative. The cost of these repeated attempts, not to mention the increase in traffic congestion, must be huge. So why do companies use them rather than the Post Office, which can hold my parcel until I walk up the road to get it? I can only assume the Post Office has even greater inefficiencies (& charges), despite, or perhaps because of the huge competitive advantage it enjoys from its Post Office network. This seems to be the biggest barrier to effective competition (which, along with simply lifting monopoly stamp prices, is what enabled the last Post Office CEO to easily increase profits and pocket $millions for himself!).

So I think the time has come for government to review the industry and split the Post Office into its separate activities of selling stamps and collecting sorting, storing & distributing mail, and introduce a competitive, open-access market for those parts where it is feasible, and competitive franchising where it's not (similarly to the competition reforms applied to many other industries in recent decades).

Specifically, I suggest government (at whatever level - national, State or local) tender for local parcel storage depots/locations (where this is judged to be a natural monopoly), to operate with "open-access" rules, so any parcel distributor (the Post Office, FedEx, DHL, TNT, Sendle etc.) can use it to store small parcels for collection by people who can't wait at home for it (most of us!). In most cases the local Post Office will win this tender, but this shouldn't be guaranteed.

Note I'm not advocating private contracting of all services as a matter of blind ideology, because successful contracting requires the important outcomes to be readily measured & included in contracts, which is not always possible. For example, customer complaints are larger for Australia Post delivery contractors who don't bother checking if someone is in, because it's quicker & cheaper for them to just leave a "You were out when we called" card (especially for apartment blocks) and it's not practical to measure "parcels not delivered that could have been" in contracts. Just how extensive this problem is has become more obvious as a result of people being at home during the COVID-19 pandemic. In this case, it's better to have postal-delivery employees paid by the hour, who managers can just kick up the bum if complaints arise!

But open-access to parcel depots along with efficient pricing of different delivery options could promote more effective competition by enabling people to choose the best & cheapest companies to deliver parcels to their local storage depot. This could then enable a wider range of delivery companies to aggregate more parcels into larger, better-utilised vehicles making fewer trips to local depots (thus reducing traffic impacts). Of course if the price is right, some delivery companies might still provide last-mile delivery, using drones, robots or old fashioned posties-on-bikes, although I'm rather sceptical about how widespread the automated options will become, given the technical, safety & commercial difficulties.

Finally, in this modern age of the internet, it's about time we were able to buy and download digital stamps (e.g. as printable bar codes), rather than queue at the Post Office for them!

A standard industry format could enable competition in this area too, so people could buy whatever art designs they like.