Massive storm brewing for couriers and deliveries in South Africa

The Parliamentary Portfolio Committee on Communications and Digital Technologies has urged the department and the South African Post Office (SAPO) to renew the state entity’s exclusive licence to distribute mail and parcels weighing less than one kilogram in the country.

This poses a massive risk to private sector companies – such as retailers and couriers – who operate in this space and have long pushed back against the SAPO’s legislated (but unenforced) monopoly in this space.

The portfolio committee pushed the idea in response to the “shock” presentation from the SAPO’s business rescue practitioners on Tuesday (3 September), where they warned that the Post Office could face liquidation as early as October 2024 if it does not receive a government bailout of R3.8 billion.

Committee chair Khusela Sangoni Diko criticised the presentation, saying that the warning came at extremely short notice, and was delivered with “a perceived lack of urgency and proactiveness on the part of the BRPs” to present viable alternatives.

The committee also criticised the BRPs’ lack of a coherent plan to protect current and find new revenue streams for the post office.

To this end, the committee called on the department and SAPO to intensify their engagements with their government counterparts to enhance cooperation and collaboration and expand government-to-government business directed to SAPO in their areas of operation.

Furthermore, it called on the Minister of Communications and Digital Technologies, Solly Malatsi, to consider renewing SAPO’s exclusive licence for the distribution of mail and parcels weighing less than one kilogram.

The BRPs, in their presentation, flagged the non-renewal of this particular piece of legislation as a big risk to the SAPO’s future operations.

Delivery headache

The 1kg exclusivity licence has been a contentious issue in South Africa, with private sector stakeholders in the logistics sector strongly opposing it.

Under section 16(8) of the Postal Services Act, any licenced postal service providers – such as couriers – are restricted from providing selected services.

These include:

• The delivery of all letters, postcards, printed matter, small parcels and other postal articles weighing up to 1 kilogram;
• The same as the above, if it fits into a rectangular box (458mm long x 324mm wide and 100mm thick) or cylinder (458mm long, 100mm thick, up to 1kg).
• Issuing of postage stamps
• Provision of roadside collection and address boxes.

In May 2024, the Department of Communications and Digital Technologies extended the exclusivity of this section to 1 April 2025.

The Post Office has long held the exclusive right to be the sole provider of these services, but due to the collapse of the SAPO, it has never been practically upheld.

Notably, the SAPO’s 25-year exclusivity licence in terms of the Act commenced in 2001, which means the period would have expired on 1 April 2025 anyway. Ostensibly, the committee is pushing for this licence to be renewed or extended, keeping the exclusivity in place for longer.

In the vacuum of the failed state-run postal services, many independent services and couriers have cropped up over the years, building successful businesses.

In 2018, the SAPO took groups like PostNet and the SA Express Parcel Association 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.

This was supported by the Independent Communications Authority of South Africa (ICASA).

However, a high court interdict prevented this from happening as more heavyweights in the sector – including Takealot – entered the fray.

Parliament is now urging the Post Office and DCDT to take up this exclusivity as a means to secure revenue for the group.

Read: Liquidation ‘Day Zero’ for South African Post Office around the corner