Australia Post boosts e-commerce business

Australia Post plans to step up its e-commerce business by taking full control of AGS, its joint venture with Dubai-based Aramax.

Australia Post chief executive Christine Holgate. Picture: Annette Dew

Australia Post plans to step up its global e-commerce business, spending $20 million to take full control of its 40 per cent-owned London-based logistics business, Aramex Global Services.

Under the deal, outlined yesterday, Australia Post will use AGS to expand its e-commerce parcel delivery services to customers based in Australia, as well as others focused on deliveries to Europe and Asia.

Australia Post has owned 40 per cent of the joint venture with Dubai-based Aramex, which included its StarTrack International business, since 2016 when it was set up in a deal done by former chief executive Ahmed Fahour.

Under chief executive Nabil Zaghloul, the joint venture company has grown its annual revenues by 60 per cent since 2016 to $138m.

“It’s an incredible growth engine for us,” Australia Post chief executive Christine Holgate said yesterday.

“And it will be much easier just having one owner rather than two. Some of its core customers are our original StarTrack International customers who are also some of our biggest domestic customers.”

She said the joint venture arrangement had limited its growth potential as there was overlap with some of the business the Dubai-based company did in its own right.

“We think we can run it more efficiently and really open it up for growth and help a lot more of our domestic customers take advantage of the services the company offers,” she said.

“We are chuffed to have it sorted at a great price.”

Aramex said it would be taking a one-off writedown of $US13m ($18m) on the deal.

AGS, which will be rebranded APGS (Australia Post Global Solutions), has offices in London, Hong Kong, Singapore and Sydney.

Ms Holgate said the deal would be part of Australia Post’s goal of boosting its total global business from around $650m to $700m — about 10 per cent of its total revenues of $6.8 billion — to more than $1bn in seven years.

She said the takeover would allow Australia Post to expand its customer base, including for shipments that may not involve transport to or from Australia.

Only $40m of AGS’s turnover of $138m is generated from parcels coming into Australia, with the rest being business largely between the UK and Asia.

“There are e-commerce customers who may be shipping their products from London to Thailand,” she said.

“AGS has developed a set of solutions to help customers through all the complexity of the logistics.

“It is a vehicle for helping e-commerce customers in Australia and overseas to trade internationally.”

Ms Holgate said taking 100 per cent ownership of the company would allow it to work more closely with Australia Post’s joint venture with China Post, Sai Cheng Logistics.

And it would provide greater services to their major customers in Australia in the e-commerce business, including online shopping club Ozsale, which imports products from the UK for customers in Australia but also sells goods from the UK into Asia.

Ms Holgate said she expected more Australian companies to look at selling globally in the future.

She said there were a growing number of companies in Australia selling offshore, as well as Australia-based companies importing products and ingredients from overseas.