New Zealand Post, the state-owned postal service, will cut urban deliveries to three days a week from six starting in 2015 under an agreement with the government to sustain the business in the face of declining volumes.
Under a change to NZ Post's deed of understanding with the government the company would cut urban deliveries to a minimum three days a week while maintaining rural deliveries at five days starting on June 30, 2015.
NZ Post had sought to cut rural deliveries by the same amount but Communications and Information Technology Minister Amy Adams said she was "concerned about the sustainability of rural delivery services and rural contractors in general through fewer deliver days." The company's chief executive Brian Roche said the existing deed is 14 years old and out of date.
"The change in delivery frequency at some point is inevitable given the ongoing and rapid decline in letter mail volumes," Roche said. "While parcel volumes have increased by nearly 3 million since 2006, over the same period letter volumes are dropped by 322 million - or 30 percent."
Keeping NZ Post's business model unchanged "would have had dire economic consequences and would have threatened the viability of the postal network."
The company reported a 29 percent drop in profit last year as its traditional letters business weakened and it wrote down the value of some postal assets.
Adams said if changes weren't made, the government could end up subsidising NZ Post by more than $30 million a year.