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  • Dec 28, 2014
  • Updated: 7:58am
NewsHong Kong
SOCIAL SERVICES

Post office set to raise fees again despite hike just four months ago

Cost of mailing a letter already went up in October, but self-funded government body says more revenue is needed to get in the black

PUBLISHED : Monday, 10 February, 2014, 4:38am
UPDATED : Monday, 10 February, 2014, 8:54am
 

Consumers can expect more frequent increases in postal rates as loss-making Hongkong Post mulls further fee adjustments to keep itself afloat.

Staff costs and rents were two areas keeping the self-funded government department from being financially sustainable, a union leader said.

The post office last raised charges for local and air mail just four months ago, in October. Fees rose by up to 25 per cent in the city's first revision of postal charges in more than a decade.

The move was estimated to bring in an extra HK$340 million a year, but would not be sufficient to return Hongkong Post to the black in the longer term, the post office said.

"To secure longer-term financial sustainability, we will continue our strategy on cost management," a Hongkong Post spokeswoman said.

"Also, we will keep postage rates under regular review and adjust them periodically with regard to relevant factors, such as cumulative inflation, our financial position, the economic environment and the affordability of rates for the public."

It is understood Hongkong Post wants to increase fees every one or two years.

The post office underwent reforms in 1995 to become more commercially independent. While it remains a government body, it operates as a self-financing entity supported entirely by investment returns from the Post Office Trading Fund (POTF).

But the rise of electronic communications has taken its toll on the business in recent years.

Inflation and wages were also to blame, Hongkong Post said.

Since the 2007-08 financial year, its business performance has deteriorated. An operating loss was first reported in 2011-12, reaching HK$50 million, and losses worsened to HK$114 million in 2012-13.

That was despite an overall increase in mail traffic that pushed its operating revenue up by 22 per cent, from HK$4.12 billion in 2006-07 to HK$5.01 billion in 2011-12.

Hongkong Post said revenue increase could not fully offset its expenses, which rose 38 per cent in the same period, from HK$3.67 billion to HK$5.06 billion.

Until October, most of the principal postage rates - covering local letters, domestic parcels, air mail and surface mail - had not been adjusted since 2002. The postage rate for local parcels was last adjusted in 1996.

The October move saw the cost of a stamp for a local letter weighing 30 grams or below rise 22 per cent, or 30 cents, to HK$1.70. The price for a letter of 20 grams or below sent via air mail increased to between HK$2.90 and HK$3.70, depending on the destination.

Small parcels of up to 3kg now cost HK$55 to post locally, up 17 per cent.

The changes were followed by more fee revisions in December, this time for postal box rental and redirection of parcels - the first fee adjustments for these services since 1995.

Postal Workers Union chairman Eric Cheung Wai-kuen said the crux of the problem was the fund, which should be reviewed, if not ditched altogether.

"The postal service is a public service that the government cannot scrap," Cheung said. "But the post office is asked to be self-financing under the POTF.

"That means we have to pay market rents for our post offices, even in shopping centres on public housing estates."

The hands of Hongkong Post were also tied in terms of controlling staff costs, he said.

More than 70 per cent of the roughly 7,000 workers are civil servants, and Hongkong Post is obliged to follow annual adjustments in civil-service pay mandated by the government, regardless of the fund's financial position or market pay rates.

Under such a mode of operation, Cheung warned, Hongkong Post could never be financially sustainable. It would be forced to keep raising fees more frequently and in bigger amounts.

Wilson Shea Kai-chuen, founding president of the Small and Medium Enterprises Association, said he expected small companies to switch to greater use of electronic communications to avoid spending more on postal services.

"But many companies still need to send cheques or statements by post," Shea said.

The post office maintains it is trying to move with the times.

"While electronic communications do pose a negative impact to the use of physical mail globally, [Hongkong Post] is committed to accommodating these changes," the spokeswoman said. "It has continued to launch new services as well as enhancing existing services in order to maintain competitiveness.

"We strive to provide a quality service to the public. Notwithstanding the financial performance, we are able to maintain our performance pledges and targets," she added.

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