NZ Post chairman Michael Cullen said the state-owned body had to act to remain viable, conceding the plan was likely to involve “significant” job losses.
“Unfortunately the rate of decline has been accelerating, we’re now seeing letters go down by over eight percent per annum and the underlying trend is clear,” he told Radio New Zealand.
NZ Post, which was formed in the 1850s, currently delivers mail six days a week, with Sunday the only rest day.
But it has received permission from the government to cut back to three days in mid-2015 in a bid to contain costs.
“(It) reflects the need to balance the immediate interests of postal users with the longer term need for greater flexibility for New Zealand Post, given the dramatic reduction in the volume of postal items over the past 11 years,” Communications Minister Amy Adams said.
Cullen said it was too early to predict how many jobs would be lost but unions said about 1,000 positions were at risk.
He said digital technology had triggered a “very rapid” fall in the number of items mailed, as customers sent messages and received bills electronically, casting a pall over the future of physical mail.
“I really can’t predict at what time we may be looking at really a residual kind of postal business,” he said.
“Nobody knows that around the world. Every postal company in the world is facing exactly the same problem.”
NZ Post has expanded into courier and banking services over the past decade, allowing it to turn a NZ$121 million ($102 million) profit in the 12 months to June 2013, despite the fall in traditional mail.
The growth in courier parcel deliveries fuelled by online shopping has helped postal services in some countries offset losses incurred by mail services.
But Cullen said competition with private operators in the New Zealand courier market was extremely keen, meaning parcel deliveries could not “pick up the slack” from other parts of the business.