Australia Post to restructure business to protect profitability

Australia Post is reorganising its business to bring together its parcels and express services under the StarTrack brand, while leaving mail and post office services under the existing core brand. The company confirmed plans today that will see it reducing its head count by about 900, mainly cutting managerial, administrative and support roles over the next 12 months.

Most of the losses, as expected, will be from head office in Melbourne, with impacts in other areas likely to be “small”.

The state-owned company said details are still to be worked out, but customer-facing roles, including mail delivery staff and post office staff, will not be impacted.

Australia Post Ahmed Fahour said the changes are a response to the 30% drop in letter volumes over the past five years, and the expectation that volumes will continue to decline by between 8 and 12% a year.

He said for the first time, losses in the letters business were “overwhelming” the profits being made in the high-growth parcels business.

“Without postal services reform, the losses in our letters business will reach a billion dollars per annum within a few years. By making these changes now, we can minimise the impact for our people, our broader workforce, our business and the community,” said Fahour.

The Australia Post chief said postal businesses around the world were facing similar challenges. Australia Post will transition to become a “modern” postal and parcel service over the next 12 months, but Fahour insisted that post offices would remain in communities everywhere, and his company would continue to deliver to all 11.2m addresses across the country.

Australia Post made a A$312m ($292m USD) profit last year as a whole, but its letters business lost A$220m ($206m USD). This year, expectations are that the letters business may lose as much as A$350m ($328m USD).

Restructuring

Under the new structure, Australia Post will be the brand used for retail and communication management activities, providing “trusted” services for consumers and small businesses, including online and post office services.

The StarTrack brand will be used for what were Australia Post parcel and express services, along with e-commerce logistics, supply chain services, including local and international parcel delivery for businesses and online marketplaces. StarTrack was the business Australia Post reorganised after buying out its partner, the airline Qantas, in 2012.

A split in the letters service to introduce a slower “Regular” delivery service along with the existing “Priority” service, will allow Australia Post to transfer some resources from the declining letters business to parcel delivery.

“We have already been doing this for some time now,” Fahour said. “Today our posties are able to deliver 25 percent of their rounds with parcels compared to virtually zero only a few years ago.”

Fahour said his company would look to expand the range of trusted services it offers in post offices, and extend accessibility and convenience for those services. The company has previously announced that from November, post offices will open on Saturdays.

Greater convenience and personalised choice in services will be key to both physical and digital services in future, the Australia Post CEO suggested.

Dropping “thought bubbles”

The Communications, Electrical and Plumbing Union (CEPU), which represents 50,000 workers in the communications industry, accused Australia Post of being unclear over the future development of its services.

The union demanded more explanation over how the Post will continue delivering its mail services, how changes would impact on work practices and whether post offices would be closed.

Jim Metcher, the New South Wales Postal and Telecommunications secretary for the union, said the Post was simply dropping “thought bubbles”, and was fuelling anxiety and uncertainty among employees.

“It’s time for Australia Post to share its vision about the future of our mail services,” he said. “Changing service models have widespread implications for staffing and work practices as well the customers and businesses that rely on postal services every day.”