Alen Rako thought his small business had survived the pandemic. Then he got a nasty surprise at the post office.

In April, Mr Rako made his usual trip to his local, only to find that international postage costs for his products had skyrocketed “by 700 per cent” without warning.

Mr Rako runs AlenAleaDesign, a small family business in the Melbourne suburb of Thornbury that produces hand-dyed thread for lace-making.

The business relied on Australia Post’s ‘Economy Air’ international postage service for merchandise, which allowed sellers to ship small products overseas weighing less than 50 grams for just $3.20.

But on April 23, Mr Rako discovered Australia Post had “increased postage fees by 700 per cent overnight by not allowing light merchandise to travel as a letter with a custom form attached”.

“Now, [Australia Post] requires such items to travel as a parcel under 250g with a fee ranging from $15 to $35 dependent to the item destination,” he said.

Mr Rako sells his wares via online arts and crafts hub Etsy.

Most products weigh just a few grams and cost less than $6, and most of the customers for the niche items are based overseas.

Alen Rako sells hand-dyed thread and other small items, but a steep rise in postage fees has hurt his business. Photo: AlenAleaDesign

Since the ‘Economy Air’ service for lightweight products was cancelled, Mr Rako has been forced to raise the cost of postage to match the fee rises, and has seen his sales plummet dramatically.

Postage to the United States, where most of his customers were located, has risen to almost $20.

This price rise has resulted in a “100 per cent” drop in sales to the US, where most of his business came from, Mr Rako said.

“They were used to paying $3.50 [for shipping]. Now they have to pay $21, it’s quite a big increase”, he said.

Australia Post told The New Daily the decision to scrap the ‘Economy Air’ service for lightweight letters was due to new rules from the Universal Postal Union, an international body with 192 member countries headquartered in Bern, Switzerland.

A spokesperson for the firm said the change was made last year.

“In September last year, due to changing Universal Postal Union (UPU) requirements around electronic data declarations, Australia Post amended its Economy Air Letters service to accept only printed material with no commercial value,” the Australia Post spokesperson said.

But Mr Rako said he received “no notification whatsover” of the service change and had been continuing to post merchandise as usual until he was informed by his local post office that the ‘Economy Air’ service was no longer available on April 23.

When asked if Australia Post consulted with businesses affected by the service cut, the spokesperson said “given this change was driven by changes to UPU requirements and not by Australia Post, customer consultation was not feasible”.

The service cut threatens to wipe out Mr Rako’s business.

“We were doing reasonably well until recently. We have a turnaround that is small but consistent and was sufficient to survive through the worst of the COVID period,” he said.

Mr Rako said he could not “absorb” the new postage costs, and that customers simply would not pay them.

“In effect, Australia Post has just killed my business causing job losses as [the] domestic market for this product is quite limited,” he said.

Mr Rako said he had recently been forced to lay off two part-time staff due to the sudden drop in business triggered by the postage fee hikes.

He is desperate for Australia Post to offer an alternative and a lifeline to his business and others like it, and said he hoped to rehire his former employees if the situation turned around.

“Australia Post is destroying Australian homegrown efforts. No wonder China is doing great as they are able to swamp the world with small parcels whilst Australia Post is killing Australian small business export efforts,” he said.

Australia Post told The New Daily the firm was “working towards introducing a lightweight Economy Air option as part of our international parcels service before the end of 2021 for customers who had previously used the Economy Air letters service to send merchandise”.

For Mr Rako and other small business owners like him, though, it may come too late.

“I would like some certainty. I can’t work on promises,” he said.

“I need to notify my clients and change my prices online.

“I understand that [postage] would cost more than what it did before, and I’m happy to pay that provided they come to some reasonable pricing … If this gets prolonged further it will be much worse.”

Labor’s shadow communications minister, Michelle Rowland, accused the government of being ‘missing in action’ on the issue.

“For many small businesses, 2020 was the year from hell. This decision has the potential to decimate small businesses who make nano products to sell abroad,” Ms Rowland said.

“Scott Morrison and Paul Fletcher were all too happy to meddle with Australia Post when it suited them politically. Why are they now missing in action when small businesses urgently need their help?”

The New Daily put questions to Communications Minister Paul Fletcher’s office but did not receive a response.