Australia Post losing millions on inbound parcels
Australia Post has revealed it is losing millions of dollars covering the cost of inbound parcels as customers seek cheaper products from international online retailers. Under current international pricing arrangements, Australia Post says it makes a loss on every parcel coming into the country weighing under 2kgs – which includes shipments of books, clothes and DVDs.
In the financial years 2010-2012, Australia Post estimates that it will make a loss of AUS $1.06 per inbound international airmail packet, on a volume of approximately 39.7m articles.
This equates to an approximate loss of $42m for the period, or more than $20m per year.
Australia Post submitted its concerns to the Productivity Commission, as the government body compiles a report focusing on Australia’s retail industry. A part of the study could investigate whether introducing a tax for online sales is practical.
International letter and parcel post flows are governed by a number of treaties under the auspices of the Universal Postal Union (UPU), which is where change would have to come to turn around Australia Post’s losses in this area.
In its submission to the Productivity Commission, Australia Post said: “The UPU’s payments arrangements are complex, subject to price floors and caps, and do not properly reflect the true processing costs of many destination postal administrations, including Australia Post.
“Under the UPU’s payment arrangements, Australia Post gets paid the same amount for the processing of inbound international mail irrespective of its actual costs of delivery.
“In the case of Australia Post, the payments it receives under the UPU’s terminal dues system is well below the cost of delivery within Australia.
“Being a net importer, this means that Australia Post incurs a substantial loss on the processing of such mail.”
When approached by Post&Parcel, Edouard Dayan, director general of the UPU, said: “The UPU’s goal is to allow all its member countries to exchange mail items among themselves according to international standards of quality and through networks that are better interconnected.
“Our work aims to better define the remuneration member countries get for processing each other’s mail and the UPU is trying to put in place systems that cover the destination costs.
“All member countries are welcome to participate actively in the discussions and negotiation process, and the Postal Operations Council will submit proposals at the next Universal Postal Congress in 2012.”
In terms of domestic parcel traffic, Australia Post is benefiting from the meteoric rise of online shopping – with the operator witnessing an 11% year-on-year growth in volumes.
The Productivity Commission confirmed that it expects to publish its interim report next month.
