Australia Post now a “two-speed” business, says CEO

Australia Post said this week that it is now effectively a “two-speed business”, with letter volumes and profitability dropping away quickly, while parcel volumes are surging thanks to the boom in e-commerce. Australian Postal Corporation chief executive Ahmed Fahour told a Senate estimates hearing on Tuesday that a “systemic shift” in society towards digital mail and away from physical mail meant letter volumes are declining 6.3% this year.

“This takes our letters business backwards to levels not seen since the 1990s,” he said.

Parcels, on the other hand, are seeing volumes growing by 10.2% at present, with December’s volumes up 20% on the previous year, with 3m more parcels delivered than in an ordinary month.

“We are managing a two-speed business,” Fahour said. “Our peak period leading up to Christmas really highlighted a widening gulf in the volumes and profitability of our letters business and our parcels business.”

Australia Post is currently engaged in a “Future Ready” transformation programme to address the major changes in the Australian Postal market, and to build growth areas like parcels and retail activities in post offices.

Fahour said: “Our team are doing everything we can to transfer resources, capital and, most importantly, our people from our loss-making letters business to our profitable retail and parcels business, while still meeting the high service standards under our community service obligation.”

Fahour told the Senate’s environment and communications committee that seizing the opportunity in the digital economy was “absolutely vital” for his company’s long-term sustainability.

During the hearing, the Australia Post CEO said that for the first half of the fiscal year, the postal service was on track to meeting its commercial obligations and performance standards related to the universal service obligation.

The postal corporation currently handles around 20m mailpieces each day, around 5bn items each year, he said.

“Super stores”

Building on its growth potential on the retail side of its business, Australia Post is opening a series of new “super stores”, having opened the first as an expansion of a post office in Brisbane, with plans to open 30 super stores by June in all states, taking in both metropolitan and regional areas of the country.

Christine Corbett, the Australia Post executive general manager for retail services, said: “The super store concept is really all about Australia Post increasing the access, convenience and choice for customers in how they do business.”

Within a super store will be six zones for small business and consumer customers.

Along with expanded postal counter zone, these zones will include a face-to-face customer service zone, an “online essentials” e-commerce zone, a financial and identity services zone, a travel zone in association with American Express, and a 24-7 zone with vending machines and parcel lockers offering self-service options for any time of day or night.

Corbett said of the increasing use of self-service technology: “This is technology where customers can choose to go to the normal counter or go to machines to pay a bill using cash or credit cards, or access a parcel. This gives customers a choice and helps to alleviate some of the queue waiting times, and frees up our staff.”