Blow to South African couriers

The government has extended the South African Post Office’s monopoly on delivering specific packages until April 2025, a blow to courier companies.

This decision comes despite the Post Office’s ongoing financial struggles and the success of private courier companies.

In February 2024, the Department of Communications and Digital Technologies (DCDT) gave notice that contentious laws giving the SAPO the exclusive right to provide certain services are up for review.

The department gazetted a notice saying it intends to review section 16(8) of the Postal Services Act, which refers to a period of time in which no person may provide certain reserved postal services other than the SAPO.

Under this clause, any licenced postal service provider – such as couriers – is restricted from providing selected services. Currently, this includes –

• The delivery of all letters, postcards, printed matter, small parcels and other postal articles weighing up to 1 kilogram.
• Issuing postage stamps.
• Provision of roadside collection and address boxes.
• Providing retail outlets at which customers can access these services.

Last month, the DCDT extended the period until 1 April 2025 during which only the SAPO can provide these ‘reserved’ postal services in South Africa.

Previously, SAPO held exclusive rights to deliver letters, postcards, small parcels, and other postal items under one kilogram. 

However, the Post Office has been in decline for years. The company has reported yearly losses since 2013, exceeding R19 billion in total. With ongoing business rescue proceedings, SAPO is expected to shed over 4,800 jobs.

The state-owned enterprise was placed in business rescue in September 2023 as it was insolvent, and its liabilities exceeded its assets by nearly R8 billion. 

The entity’s financial collapse meant it could hardly offer these services over the past few years. Lost packages and slow delivery are commonplace.

Therefore, SAPO’s exclusivity on these services was rarely enforced, and private couriers have flourished in the gap left by the struggling state-owned enterprise.

However, in 2018, the SAPO took PostNet and the South African Express Parcel Association  (SAEPA) to court to try to uphold the law and prevent these groups from encroaching on the SAPO’s exclusive rights by ordering them to stop delivering small packages.

SAEPA comprises member companies in the express freight and courier industry, including large multinational operators and South African companies.

According to its website, the association represents service providers throughout the express supply chain. Popular South African courier service The Courier Guy is part of the organisation.

The dispute revolves around the Postal Service Act, which grants SAPO exclusive rights to deliver letters, postcards, and small parcels of up to 1 kg.

eCommerce businesses are worried a court victory for SAPO in this matter could be disastrous. 

SAEPA CEO Garry Marshall told ITWeb that SAPO’s financial struggles make them a risky choice for a monopoly. 

He argued that the Postal Services Act allows couriers to handle these deliveries and that SAPO’s monopoly should be limited to “basic postal services.”

Marshall told Daily Investor that there is an important difference between postal and courier services. “Our members don’t provide a reserved postal service when carrying a sub-1 kg item. They provide a courier service, which is materially different,” he said. 

In 2019, the communications regulator ICASA sided with SAPO, ordering couriers to stop delivering small parcels. 

However, a High Court interdict put a hold on this ruling, allowing private companies to continue operating. 

The battle intensified in 2022 when eCommerce giant Takealot joined forces with PostNet and SAEPA against SAPO’s monopoly claim.

Marshall said this extension of the exclusivity awarded to SAPO to provide reserved postal services does not change the status quo.  

“SAPO has always been the sole licensee to provide reserved postal services since its license was awarded to it almost 25 years ago,” he explained.

“The Minister is required in terms of the Postal Services Act to consider from time to time, and at least every five years, if SAPO should remain the exclusive provider of reserved postal services and determinations like the recent one have been repeatedly made since SAPO was given the license, so nothing has changed.”

He noted that SAEPA disagrees that any of its members currently provide a reserved postal service and that couriers are not reserved service license holders, which means they can’t carry items under 1 kg. 

“There is a dispute over the correct interpretation of the Postal Services Act, and that is the matter that is before the High Court and will be determined in due course, we trust in favour of SAEPA,” he said. 

“Until then, SAEPA’s members will continue to provide courier services in relation to sub-1 kg items.”