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Australia Post “becoming a parcels business” says CEO

Thursday, February 28th, 2013

The chief executive of Australia Post warned that the reduction in his company’s workforce is “likely to continue” as mail volumes slide.

Ahmed Fahour was speaking at a meeting of the tCommittee for Economic Development of Australia (CEDA) in Melbourne today, outlining his thoughts regarding the role of the national postal service in the digital economy.

The central context was a 20% drop in traditional mail volumes since 2008 as more and more Australians switch to online communications. Fahour said in response, Australia Post was rethinking its strategy with a view to more of an emphasis on the growing parcels market.

The company is continuing a “Future Ready” transformation programme in which it is streamlining mail operations and expanding parcel operations.

“Delivering letters and operating more than 4,400 post offices in local towns across the country is still an important part of the community service that we provide, but there’s a whole other side to Australia Post, too,” he said. “We’re increasingly becoming a parcels business.”

Losses in Australia Post’s traditional mail business, which have been mounting since 2009 and last year reached $190m, will continue to grow, Fahour said.

“It will continue to grow as our customers shift from physical to digital communications,” he said. “As a consequence there has been a reduction in staff in our mail division and like our falling profits this reduction is, unfortunately, likely to continue.”

The Australia Post workforce stood at 33,031 in 2012, compared to 35,509 in 2009, with 1,000 job losses reported last year.

Digital mail and e-commerce

“Digital marketplaces supported by effective logistics networks has changed the nature of our marketplace entirely”

Fahour said his company was now thinking about its core markets in “completely new ways”, eyeing digital mail through the forthcoming new Australia Post Digital MailBox and e-commerce packages through a $2bn investment in the parcel delivery network.

After a problematic initial launch at the end of last year, Fahour said the new Digital MailBox would have another launch “in the coming months”. The service will allow consumers to receive and archive important mail electronically, in a secure version of e-mail. The service uses Pitney Bowes’ Volly technology.

“If you’re thinking of equivalents in the physical world, this is effectively your letterbox, your filing cabinet and your payments card or bank account, seamlessly combined in a secure, online environment,” Fahour explained.

E-commerce has become a billion-dollar business for Australia Post, with 70% of the company’s parcels now generated by Internet-based transactions according to its CEO.

Fahour said parcel volumes have been growing by about 10% each year over the past three years, fueled by e-commerce, and that online spending in Australia is forecast to grow at double-digit rates through to 2020.

Australia Post is investing “heavily” in capacity and technology for its parcels network, including 24-hour automated parcel terminals to improve consumer access to e-commerce parcels, dubbed Smart Lockers. Some 50 locations now have Smart Lockers, with 200 more on the way in the next two years.

Fahour said small businesses in particular will benefit.

“Not so long ago, our markets were really defined by geographic areas. Businesses would locate in an area where there was a population density that would provide the demand for the products or services that they sold. The rise of digital marketplaces supported by effective logistics networks has changed the nature of our marketplace entirely,” he said.

Source: Post&Parcel/Australia Post

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