Primary Sorting of Parcels – where we are at 24 Jun 2019

Sadly, no joy for those LPOs that provide a primary sort on behalf of the delivery arm of Australia Post, under the reformed payment scheme.

Since the inception of LPOG in 2013 we have endeavoured to bring the LPO Agreement to the point where Licensees are paid fairly for what they actually do. A bug-bear for many years past has been by reference to the costs and efforts in dealing with parcels, exacerbated by the advent of on-line shopping. 

On this theme our involvement with Post and payment reform (especially since Nicole Sheffield took on the project circa Sept 2018) was premised by an acceptance that a reduced rate letter handling fee (MMF payment) made better sense and could be agreed upon, as the flip-side presented by Post was for a lodgement or delivery scan payment to be paid for all work, on a per item basis, for parcel handling by Licensees. We agreed to work with AP to that intent and LPOG has been so engaged for many months on this project. 
As with any issue across the whole network anomalies are thrown up. As most of you would be aware, over the years Licensees who conduct Primary Sorts have had ever increasing workloads due to the ever-increasing numbers of parcels coming through the system.   

Unfortunately, this increased work requirement did not come with corresponding increased payment (outside of the BPR increases) because it fell under the umbrella flat rate MMF payment.  As part of the new Payment Review Process the flat rate MMF payment was heavily reduced under the guise that parcels would no longer be a component in its structure. That in and of itself was considered a fair trade. 
LPO agreed to this principle, however as actual values were placed against work being undertaken, it became evident that the requirement to primary sort large volumes of parcels had not been included in APs costings. LPOG has been in discussion with AP over the last 6 months in regard to this hole in the payments system, and whilst there seemed to be a consensus that there was a problem, very little has been accepted by AP
It now looks like the written definition of the MMF will not be amended to either reflect the principle for the agreed large reduction in the MMF payment amount, nor the removal of the parcel components still being seen as part of this work for Primary Sort purposes only. Because these written definitions are not being changed it is being considered by Post that the ever increasing workloads in regard to primary sorting of parcels is still covered by the greatly reduced amount of the  reformed MMF payment, simply because it is still so written. 
 Even though we thought we had an in principle agreement to address and reward costs and labour invested in all parcel handling, regrettably, we are currently at the stage where we are being advised that AP is going to be doing nothing to rectify this particular aspect  because they do not have to. 

LPOG understands that this is going to cause much stress for many members and non members alike. Licensees who do perform the primary sort will need to discuss options with other licensees in the members forums. 

For the next 3 years the impact of these changes will not be enacted as Post will continue to pay under the current scheme for negatively impacted Licensees. So the best case scenario is no change to the current financial status for impacted LPOs for 3 years. The danger lies at the end of the 3 year term if nothing changes, the removal of the top-up payment for anyone looking to sell in that time, the difficulty of being able to sell with the uncertainty of the reduced MMF payment and the increasing MM workload, and the reality that the loss of the MMF for the primary sort delivery points will suck up any of the increases that may have been gained in any other area of the revenue under the new payment scheme.

LPOG will be engaged in the discussions with members and external parties to determine the way forward in the face of this predicament.