Australia Post scrambles to handle parcels boom

An Australia Post parcels facility. Picture: Tony Gough

Australia Post is in the midst of an unprecedented boom in parcel delivery, with 90 per cent year-over-year growth and regular days of over two million parcels a day.

This is the level of activity normally enjoyed at Christmas, underlining the boost to business as the growth in parcel numbers lifts revenue by some 65 per cent.

Most chief executives are working out how to make do in a flat market.

But Australia Post’s Christine Holgate, like her counterparts running the big supermarkets, is being run off her feet.

Australia Post has added 750 per people this year with 500 going into parcels and 200 into the call centre.

Pre-pandemic, Australia Post employed 35,000 people directly and another 45,000 contractors.

It used to run nine freight planes but this has increased to 17 to keep up with demand, which is also helping to keep afloat Qantas and trucking operators like Linfox.

Not only is the number of parcels increasing, they are getting bigger, with wine volumes increasing dramatically, as shown by one centre in Sydney last weekend handling 136,000 cases of wine.

Letter volumes are, unfortunately, falling almost as fast, with volumes now at 50 per cent of levels a decade ago, with the number of posties the same. Which explains why they are now working more on delivering parcels, and why Holgate recently won approval to wind back letter deliveries to every second day to help divert staff.

In the month of March, Australia Post delivered 3.3 million more parcels than it did in March two years ago.

The statistics come as the NAB online sales index showed a 21.8 per cent increase in March on year-ago levels.

The increase in online traffic has helped to keep some retail business operating in the middle of the shutdown. In April one million more people shopped online than a year ago and 212,000 shopped on line for the first time.

Australia Post chief executive Christine Holgate inspects a new parcels facility. Picture: Mark Cranitch.

In an interview, Holgate said the pre-crisis online share of retail sales in Australia was around 11 per cent, half that in the UK and around 25 per cent of Asia.

But the dramatic change caused by the crisis would push Australia’s share up to UK levels, she said.

That, combined with the push by retailers for payments by card and not cash, is helping to fast-forward the move to a cashless society.

In the six months to December, Australia Post’s parcels division posted a 13 per cent increase in revenues to $2.7 billion, with profits up 12 per cent to $193 million.

Letter revenue fell nine per cent to $1.1 billion, with a loss of $87 million.

Based on the virus’s impact, parcels will report a handy boost, which should also increase the dividend paid to the federal government.

Former parcels boss Bob Black has returned to the UK and will not return but his job is effectively being filled by three people, who will take control of their respective divisions.

Rod Barnes will run the parcel delivery operations, John Cox the group-wide IT and Gary Starr the international sales and operations.

The latter is doing it tough right now with international down some 75 per cent on inbound services.