SingPost raises postages for small packets

Increases will come at $2 to $3.4 per packet.

Singapore Post Limited (SingPost) raised its postage rates for international small packets.

According to DBS Equity Research, small packets currently come under international airmail rates, which includes letters, printed papers, as well as small packets under the same pricing structure, for a maximum weight of 2kg.

With effect from 2 Jan 2018, small packets will be subject to a new rate structure with increased minimum postage across the board, with increases of $2 to $3.4 per packet.

Currently, international mail revenue contributes about 25% to Singpost’s total revenue.

By 1 January 2018, settlement rates which Singpost pays to other postal organisations for mail delivery within their country will be raised.

DBS analyst Sachin Mittal said, "International postal settlement rates are determined by the Universal Postal Union (UPU) and set every four years. Increase in rates for international small packets deliveries are implemented to take into account higher delivery cost as well as increasing volumes of eCommerce packets."

SingPost will also cease surface mail services for small packets with effect from 2 January 2018 due to low demand for such services.

Here's more from DBS Equity Research:

We had previously highlighted that impending changes to terminal dues with effect from 1 Jan 2018 may entail downside risks to our forecasts due to higher delivery costs.

We welcome the change in rate structure. By implementing a new rate structure for international small packets and setting the minimum chargeable weight as 100g, instead of 20g as it is under the existing international airmail rate, Singpost will benefit from increased minimum postal rates as well as higher postage rates for the lighter small packets, which we believe forms the bulk of small packet volumes.

We note that for packages that are 500g and above, the new cost structure has a lower postage rate.