Australia Post: letter volumes fall over 30% in one week
It comes as the virus crisis causes a dramatic drop in sales in traditional Australia Post services such as passports, demand for which which has reduced by half. Revenue from international post has also declined as it becomes more difficult to access aircraft able to bring parcels into the country.
In an email to Australia Post staff, obtained by The Australian, Ms Holgate reported a boom in parcel deliveries as people stuck at home shop more online. Such deliveries have been the organisation’s key source of profit growth as the traditional letters business continues to fade.
However, despite the pick-up in parcels, Australia Post was still under pressure and must cut its costs, Ms Holgate explains.
“I know many of you will also be aware of the boom in parcels our teams have been managing, as more people shop online as they work from home, self-isolate or sensibly avoid confined public spaces to protect themselves in the threat of the virus,’’ Ms Holgate told staff.
“Consequently, I can appreciate for many of you this time may be confusing, and you may be wondering if parcels are growing so strongly, why are we immediately cutting back on expenses and managing our costs so tightly.”
While parcels was performing strongly, other parts of the business were feeling the effect the coronavirus was having on the economy, she said.
“Although our parcels to consumers are growing strongly right now, our letters business, our international business and many of our other great services such as providing passports, have almost immediately shrunk.
“In just the last week we have witnessed our letter volumes fall over 30%, as has our international revenues and some of the other key services like passports, have halved.”
Ms Holgate said the large growth in parcels was not enough to cover the financial impact of the decline in the other areas of the business.
“With more potential restrictions imminent, as together we fight this virus, the risk these volumes fall further is very real.
“Our strategy through this crisis is simple. Our first role must be to protect our people; their safety and for as many as possible their roles. Our second role is to serve our country, as many Australians depend on us to give them access to critical products and services through this crisis. Finally, we must safeguard our business, as we know this is our best defence to protect our people and the services we offer.”
Ms Holgate pointed to the recent closures of businesses like Myer, Country Road and Flight Centre because of restrictions imposed in the fight against COVID-19.
“We will do all we can through this period to secure new roles for Australia Post and keep our business operational. We do though also need to take further prompt action to minimise our costs, streamline our efforts to give us real focus and only spend money where we really need to at this time.”
Australia Post senior executives and directors would take a pay cut, Ms Holgate said.
“I want you to know that the executive team and our board are all doing their share. The executive team and board have all agreed to take a 20% cut in their salaries for the months ahead as we go through this crisis. In addition, the executive team has agreed to forsake any right to a bonus payment for this year, the combination of both, effectively reduces their potential earnings in this period by more than 50%. We are in this together.”
A spokeswoman for Australia Post told The Australian some projects at head office would be put on hold.
“There of course will be some head office roles, which focus on business activities that has been put on hold due to the virus, including new projects. For these people we are providing access to leave (annual, long service and/or purchased leave) or looking for opportunities in other areas of our business that has work.”