OddThinking

I need to send a document that is valuable to me interstate.

It isn’t urgent (say, within a week or two). However, it is important that it not get lost, as it will (allegedly) cost many hundreds of dollars to replace.

I asked on Twitter and Facebook whether I should send it via Australia Post or via a courier. I didn’t get a satisfactory answer, so I did the research myself. This is to help other people concerned about the reliability of Australia Post.

For the sake of calculations, I am assuming that the item is worth $1000. If it was worth more than $10,000, my decision would need to be revisited.

The alternatives I am considering are:

• Australia Post – Regular Letter
• Australia Post – Express Post
• Australia Post – Registered Letter
• Australia Post – Registered Letter with Insurance
• Independent Courier, such as FedEx, DHL, Courier’s Please, etc.

I have limited information available to me, but what I do have turns out to be enough to make a decision.

Prices [Ref 1, 2]:

• Regular Letter: $0.55
• Express Post: $4.50
• Registered Letter: $3.40 (includes $100 insurance)
• Insured Letter: $3.40 + $1.30 per $100 insurance (first $100 free) = $15.10
• Courier: Around $52 (Sample: DHL, minimum weight = 0.5 kgs)

There is a big premium for using a courier. They pick up from your door, which is good if you can be sure someone will be there, and the address isn’t impossible to describe, but I would rather drop it off at a post-office.

It might be worth it, though, if courier are more reliable.

Alas, I don’t have figures for courier reliability.

I do have some for Australia Post though! According to their annual report (p129), 95.5% of letters are delivered on time, and 98.8% are delivered within a day of the expected time.

This leaves 1.2% unaccounted for. Some of them may have been delivered later still – perhaps within the “week or two” deadline I set. Some may have been delivered to the sender. Perhap the proportion that were lost is much smaller.

Furthermore, I can hope to do better than the average by taking a few simple precautions – making sure I get the destination address right, having a relatively straightforward destination address, writing clearly and ensuring there is sufficient postage.

Nonetheless, I am going to assume that all 1.2% are lost for this next calculation.

Similarly, I would expect that the Express Post and Registered Mail have higher reliability figures, due to the additional scrutiny, but I have no support for that claim, so I am treating them as regular letters for this next calculation.

If we successfully send the $1000 letter 98.8% of the time, and lose it entirely 1.2% of the time, we have an “expected value” (in the statistical sense) of $988. We lose $12 in value through the unreliability. (Realistic figures would be reduce that $12.)

That is a very useful figure, as it gives an upper maximum of how much we are willing to spend to further protect the asset. If we spend more than $12, we will be losing out. (That is, for every 1000 letters we send, we will have less money and assets at the end.)

So, we can rule out couriers. Even if their price was a quarter of the quote that I received, and their reliability was 100%, it still wouldn’t be good value.

The next question is whether a registered letter is better than a normal letter. The $100 insurance is worth $1.20 (1.2% chance of receiving $100), so the premium we are paying is $3.40 – $0.55 – $1.20 = $1.65. That requires the receiver to sign a card to receive the letter, and that card is then sent back to the sender. It provides a level of non-repudiation; the receiver can’t deny that the letter was in their control.

Is that worthwhile? That depends on how frequently the recipient loses their mail and blames it on the Post Office! It also is probably of great assistance if the Post Office does lose the mail – it proves (?) that you sent it. In my case, I have decided that this is worthwhile, but not based on clear facts.

Which leaves the question of insurance – each additional $100 insurance is worth, at most, $1.20 to us, but costs $1.30. Therefore, we should not accept the insurance.

In conclusion, I haven’t proven that Australia post is more reliable than couriers, or even equally reliable. I haven’t come up with a particularly accurate estimate of the reliability of a clearly and correctly-addressed piece of registered mail. However, I have come up with an upper-bound to how much you should be willing to pay for higher reliability and for insurance.

From that, I can conclude uninsured mail (perhaps registered) is a better option than insured mail or couriers that charge significantly more than Australia Post.