DHL Express invests $50m in new Sydney parcel centre, plans to take on Australia Post

Australia Post dominates the nation’s parcel deliveries, controlling more than 80 per cent of the market. But DHL Express has outlined a plan to steal some of that share.

The MoU includes the construction of a parcel facility either airside or in proximity to the international airport.

DHL Express has unleashed an ambitious plan to take on Australia Post’s dominance of the parcel delivery market, with its Oceania boss, Gary Edstein, stepping up investment across major regional centres in the next “two to three years”.

The strategy comes as the number of parcel deliveries have jumped during the COVID-19 pandemic, with Mr Edstein telling The Australian DHL Express, which is owned by global logistics giant Deutsche Post, had more than doubled its normal volumes — matching its peak 2019 Christmas deliveries from May to ­August.

And with Australia’s second most populous state, Victoria, continuing to be under a hard lockdown, Mr Edstein foresees record deliveries continuing for months ahead.

Mr Edstein was speaking as DHL unveiled its biggest investment in Australia in almost 50 years — its new 8600sq m Sydney Service Centre in Mascot that cost €31m ($50m).

The centre, double the size of its existing facility in Sydney, has been designed to support the international trade of Australian businesses further, featuring an automated material handling ­system spanning 1.1km with a throughput capacity of 4200 ­pieces per hour.

It also features a 400sq m customer reception and office area for drop-offs and pick-ups, a 21-space customer car park and self-service parcel lockers, within a 12 minute walk from Mascot’s train station and high-density commercial and residential area.

Mr Edstein said it would also support its domestic network, which he planned to expand further to take on Australia Post, which currently controls more than 80 per cent of the nation’s parcel delivery market, with a monopoly in many regional areas.

“We focus on international but the growth we have experienced inbound and outbound, we will start to look at focusing on regional areas such as Newcastle, Wollongong, Geelong and Ballarat areas,” Mr Edstein said.

“Some regional areas will continue to grow further because of what is happening with COVID and we will see more of the ­Sydney and Melbourne population move to more of those regional areas over time, so we will see more businesses in regional areas.

“Once we have got significant volume to justify our investment, we will open up in those areas.”

In addition to its new facility in Mascot, Mr Edstein said DHL Express had signed a memorandum of understanding with Western Sydney Airport, which is set to begin operations in 2026.

The MoU includes the construction of a parcel facility either airside or in proximity to the international airport, which he said would “become a hub for Oceania”.

“When they open up, as long as it’s curfew-free, we plan to operate our freighters in and out of Western Sydney Airport, which means we will have to look at infrastructure on the airport or towards the airport,” he said. “So we are looking at some pretty mega investments coming up in that 2024, 2025 period.”

To combat international travel restrictions and limited freight available on passenger aircraft, DHL has chartered commercial aircraft, leading it to impose a temporary surcharge to recoup some costs until it can source additional planes from DHL’s global network.

“There is definitely an additional cost when you’re operating these types of aircraft,” Mr Edstein said.

“So we had to introduce an emergency surcharge to cover some of that cost because they are pretty expensive to operate.

“That emergency surcharge will stay on until we bed down these new (DHL Express) network flights coming in.”

In the past five years, DHL Express has invested €2.4m on a new 3200sq m office for its customer contact centre in Brisbane, €1.47m and €1.47m on respective service centres in the Gold Coast and €14m on its Melbourne gateway facility.