Tag: Australia

The Australian Competition and Consumer Commission today issued its second report on whether Australia Post is subsidising its competitive activities with revenue from its monopoly activities. The report analyses the 2005-06 regulatory accounts of Australia Post. “The results of the analysis are similar to last year,” ACCC Chairman, Mr Graeme Samuel, said. “The regulatory accounts do not provide evidence that Australia Post is subsidising its non-reserved services from its reserved services.” Logistics, which is one of the non-reserved services, was again the recipient of a subsidy in 2005-06, but the source of the subsidy appears to be the other non-reserved services, not the reserved services. This was a result of logistics related infrastructure being under-utilised while Australia Post builds this part of its business. “In 2005-06, the shortfall in revenue earned compared to the direct cost of providing logistics is less than in 2004-05,” Mr Samuel said. The 2005–06 cross subsidy monitoring report will be available from the ACCC’s website.

This report presents the results of the ACCC’s analysis of Australia Post for the 2005–06 financial year to determine whether or not it is cross-subsidising from its reserved services to its non-reserved services.

Australia Post has strictly mandated delivery timetables but, until last year, the way letters and parcels passed through most of its vast network was all but invisible.

Until the middle of 2006 the organisation relied on a manual mail monitoring system that could only reveal when a letter went into the postal network and when it popped out at its destination.
If there was a problem along the way that delayed the letter, Australia Post had no way of quickly identifying the bottleneck and rectifying the problem so it could meet a requirement that 94 per cent of standard letters be delivered on time.

To solve the problem the postal service turned to radio frequency identification (RFID), a technology it had worked with on international mail runs, Australia Post network services performance manager Alan Smith says.

Early last year Australia Post decided to end its long-running mail monitoring agreement with KPMG and signed a five-year contract with RFID monitoring specialist Research International.

The agreement led to the installation of RFID equipment at national mail distribution centres, allowing Australia Post to track thousands of letters tagged with tiny radio frequency chips. Smith says Australia Post initially installed RFID readers at 53 sites and has since added another 17, including five that were brought online this month.

Australia Post also has 2000 businesses and consumers participating in the mail monitoring program and each month the group inserts an estimated 15,000 RFID tags into letters, which are then put into the postal system to assess whether mail is delivered on time.

The RFID readers in Australia Post facilities throughout the country provide a detailed picture of how an item moves through the postal service and pinpoints a bottleneck if the item is delayed.

Smith says Australia Post can identify and fix causes of delays anywhere in the postal network in two to three days, instead of the six to eight weeks it used to take.

Aside from speeding the rectification of faults, RFID has freed up Australia Post staff to focus on other tasks.

Smith says the results of the program are so impressive that overseas mail carriers, including New Zealand Post and Britain’s Royal Mail are interesting in emulating aspects of the RFID network and set-up strategy.

Takeover target Multiplex is poised to execute one of the Melbourne CBD’s largest office pre-leases through a $150 million deal with Australia Post.

Multiplex is expected to sign Australia Post to 42,000sqm of space at its planned Southern Cross West tower, even though the postal authority still hasn’t completely ruled out the option of building its own new national headquarters in Spencer Street or moving to the APN Property Group’s 567 Collins Street.

But with Southern Cross the hot favourite it’s a timely boost for Multiplex, which only last week announced it had received an approach from a so far undisclosed suitor.

Multiplex shares surged on the news last Thurday, rising 17 per cent to AUD4.85, but have since eased to close yesterday at AUD4.45.

Exhibition Street’s existing Southern Cross East office tower, 75 per cent owned by Multiplex and already filled with mostly Victorian Government workers, is one of the group’s largest single assets, with a March 2006 valuation of AUD390 million.

The west tower, to face Bourke Street, is the second office building planned for the development, which is on the site of the once Nauruan Government-owned five-star Southern Cross Hotel.

The 22-level building, expected to have around 45,000sqm of space, has so far cost AUD6 million.

Australia Post is understood to be ready to pay a rental of around AUD350 a square metre, with a deal reflecting an incentive of about 15 per cent of lease’s value.

An initial lease period of 10 years is expected.

Grant Samuel, which is advising Australia Post on its national headquarters move from Cromwell’s 321 Exhibition Street, has put up APN’s 567 Collins Street development site as an option.

APN bought the site from soft drink millionaire Spiros Stamoulis for about AUD25 million midway through last year. The site has approval for a 50,000sqm office building.