SINGAPORE – Singapore Post (SingPost) incurred an operating loss of $16 million in its post and parcel business in 2022, amid declining mail volumes and competition from logistics and e-commerce firms that have expanded their delivery capabilities.
These changes in the postal market have driven up the costs of sending mail, said Senior Minister of State for Communications and Information Tan Kiat How in Parliament on Wednesday, as he explained the rise in postal prices by 20 per cent to 51 cents for standard mail from next Monday.
Mr Tan was responding to questions from MPs, including Workers’ Party MP Jamus Lim (Sengkang GRC), who asked whether the Infocomm Media Development Authority (IMDA) had considered SingPost’s $38.8 million profit in the last financial year (FY) when it reviewed the company’s decision to raise postage rates.
Mr Tan said the postal landscape has changed dramatically in the last decade, prompting the first major increase in postage rates since 2014 so that the licensed public postal company can deliver letters to every address in Singapore. In 2014, postage prices rose from 22 cents to 30 cents.
While SingPost’s overall business was profitable in FY2022, more than 90 per cent of its profits came from its logistics business, and largely from its overseas investments, said Mr Tan.
“SingPost’s core business in Singapore is post and parcel, which incurred operating losses of $16 million,” he said. “This is due to the global decline in letter mail, as well as intense competition from logistics companies and e-commerce players growing their own parcel-delivery capabilities. As a result, per-letter delivery costs have risen considerably.”
The price increase is designed to support SingPost’s domestic business to ensure that it is able to sustain itself and not rely on its performance elsewhere, said Mr Tan.
“I think we have to make clear that this is not the regulatory framework which we are operating under,” he said. “The revenues and the profits from (Singapore are) not supposed to offset the losses in other businesses, and vice versa.”
SingPost will provide a booklet of 10 free stamps worth 51 cents each to every household. This is likely to cover a household’s postage fees for roughly a year, as the average consumer sends less than one item of mail a month, Mr Tan said.
Professor Lim asked if there is a more efficient approach than raising costs, which will spill over to key customers like large corporations and the Government.
Mr Tan said the Government contributes to only a small proportion of the mail volume in Singapore, and that separate reviews by the Government and SingPost are being carried out to assess the future of post and its operations amid greater digitalisation and lower demand for mail.
Mr Yip Hon Weng (Yio Chu Kang) asked if SingPost needed approval from IMDA before raising the rates and whether the authority had taken into account the projected revenue SingPost would make in the light of the increase.
Mr Tan said IMDA had approved SingPost’s request to raise rates to reflect the cost of delivering letters. The new prices are also comparable to those of countries like Japan and the United States.
There is no guarantee that the increase in postage will improve the financial position of SingPost, as the boost in revenue may not compensate for the decline in letter volumes if customers opt for more digital options, Mr Tan added.
SingPost is expected to revamp its post and parcel business here to remain efficient, said Mr Tan, without going into specifics. “This is a move that could put SingPost on a more sustainable path to fulfil its obligations as a public postal licensee.”
SingPost said previously that mail volume declined by more than 40 per cent between 2018 and 2023, and that the price increase will address rising costs in labour, utilities and transport.
Postage rates under the current structure are set according to different weight tiers and dimensions, ranging from 20g to 500g, and sizes of up to 162mm by 240mm by 6mm for standard regular basic mail.
For example, the postage for standard regular basic mail weighing up to 20g is now 31 cents, and 38 cents if it weighs up to 40g.
From next Monday, sending standard regular basic mail that measures up to 162mm by 240mm by 6mm – roughly A5-sized – and weighs up to 500g will cost a flat 51 cents. Sending A4-sized mail weighing up to 500g will cost 80 cents.
