E-commerce players believe the South African Post Office’s (SAPO’s) provisional liquidation process will work in their favour in its ongoing court bid to block courier companies from distributing small items in SA.
This, as the state-owned entity (SOE) has been in dire financial straits over the past few years, owing creditors at least R4.4 billion, as of 31 March 2022.
In February, a judgement was issued to place SAPO under provisional liquidation, which led to a provisional liquidator being appointed at the end of March.
The Department of Communications and Digital Technologies (DCDT) says it is engaging critical stakeholders in dealing with the placement of SAPO in provisional liquidation.
As SAPO’s future is uncertain, the courier industry and e-commerce sector are adamant this will weaken the years-long court action by the SOE, against PostNet and the SA Express Parcel Association (SAEPA).
The court battle, which stems from 2018, is informed by the Postal Service Act, which stipulates the government entity has the exclusive right to provide delivery services for all letters, postcards, printed matter, small parcels and other postal parcels up to and including 1kg.
Local e-commerce players previously warned that if the court rules in SAPO’s favour, it could shatter the e-commerce sector and result in disaster for the industry.
Garry Marshall, CEO of SAEPA, a body that represents a large number of e-commerce couriers, explains: “I think SAPO’s provisional liquidation strengthens our case. It is a matter of public record that SAPO makes enormous losses and it places business at huge risk if they were to be granted this monopoly.”
According to Marshall, SAEPA does not agree with the interpretation of the Postal Services Act applied by the Independent Communications Authority of SA (ICASA).
“We say that the Act, correctly interpreted, does allow couriers to deliver sub-1kg items. It is only in the sphere of the basic postal services that SAPO has a monopoly. So, to this end, we believe sanity will prevail.”
If the court rules in favour of the embattled SOE, this could lead to immense financial and logistics consequences for e-commerce courier partners and online retailers, notes Marshall.
The future growth of SA’s business-to-consumer e-commerce will be severely curtailed by an unreliable or inefficient delivery service marred by late and damaged parcel deliveries, he states.
In 2019, ICASA ruled in favour of SAPO, ordering courier services to stop delivering small parcels by March 2020. PostNet was later served with a cease-and-desist order for violating the Act.
However, a High Court interdict filed by PostNet and SAEPA halted SAPO from taking dominance by handling all smaller parcels.
In March 2022, online retail giant Takealot threw its weight behind the legal case, siding with PostNet and SAEPA.
As SAPO moves towards being declared insolvent, the Ecommerce Forum of South Africa (EFSA) believes that placing limitations on the private courier industry – which is valued at around R20 billion – will have a negative impact on SA’s budding e-commerce sector.
“If SAPO is liquidated, and declared bankrupt before the case was completed, it would be difficult to see how the court could award the case in its favour, except as a sort of epitaph on its gravestone,” comments Alastair Tempest, CEO of the EFSA.
“But government is more than likely to be very keen to prevent yet another SEO from falling over. Particularly one which employs low-skilled workers.”
According to Marshall, the court matter has been held up for years because of a procedural dispute between PostNet and ICASA that was only recently resolved.
The next step from here is for ICASA and SAPO to file affidavits in answer to the cases of PostNet, SAEPA and Takealot.
“We are told that in the meantime, the DCDT, which is responsible for both ICASA and SAPO, is busy drafting an amendment to the old Postal Act that would clarify the last-mile monopoly provided by the Act,” notes Tempest.
Meanwhile, an online petition on Change.org has been signed by almost 76 000 protestors, who are urging the High Court to review SAPO's interpretation of the Postal Services Act, saying it infringes on consumers’ right to choose which courier services to use.
Takealot and SAPO told ITWeb they are not in a position to comment at this time, as the matter is sub judice.
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