2009-10 Annual Report - Australia Post

CORE BUSINESSES PARCELS & LOGISTICS
boxes and street addresses around the world. This unrivalled network,
including last-mile delivery capabilities and the consumer market’s trust
in local postal services, is enabling UPU members such as Australia Post
to benefi t from the exponential growth in online trading (particularly
through small ad hoc items).
Express Courier International
Express Courier International (ECI) is a cost-effective courier service
that provides door-to-door delivery to around 200 countries and
territories, with deliveries between most major cities taking between
two and four business days.
The ECI service is underpinned by Australia Post’s membership in
the Kahala Posts Group (KPG), an alliance of 10 international postal
enterprises. Membership has enabled us to have greater control over
delivery in key destination countries, dramatically improving ECI’s
reliability and performance standards. All members continue to improve
their service performance and integrated network capabilities, and this
year collaborated on developing strategies for growing markets,
particularly e-commerce.
Express Post International parcels
The Express Post International (EPI) service offers customers priority
handling, basic tracking and signature on delivery, with delivery between
metropolitan areas of major cities within three to seven business days. EPI
is in its third full year of operation and continues to be highly profi table.
Air Mail
The Air Mail service, which forms the bulk of Australia Post’s
international parcel volumes, is a reliable and affordable way to transfer
diverse business and consumer items between Australia and almost any
address in the world. This year, the outward Air Mail service experienced
a small downturn in volume, while revenue was steady. The decline was
largely in the consumer segment, which is moving towards gift cards
and online gift giving (requiring no postage or cheaper domestic postage
in destination countries). In addition, some consumers, particularly
online traders, migrated to the Registered Post International product.
Registered Post International – parcels
Launched in June 2008 following the success of the ECI and EPI
services, Registered Post International (RPI) gives customers signature
on delivery, which shows that items have been posted and delivered.
It can be used to send items weighing up to two kilograms. A receipt
at the lodgement point and proof of delivery are service features valued
by people selling goods online. RPI experienced strong volume growth
in its second full year, in part due to customers migrating from Air Mail.
Logistics services
Post Logistics
Post Logistics offers business customers an end-to-end supply chain
capability, from domestic or international manufacturers to consumers.
Value-added services provided by Post Logistics along the supply
chain include:
• multi-country consolidation (sourcing products or components
from various countries)
• multi-modal international freight forwarding
• destination port and customs services
• electronic order processing
• automated reporting and credit management
• warehousing (in Australia and China)
24 AUSTRALIA POST ANNUAL REPORT 2009–10 | REPORT OF OPERATIONS
• inventory management
• kitting
• pick and pack and distribution
• returns management.
After seven years of growth, in 2008–09 Post Logistics recorded
a decline in revenue due to the retail sector downturn, so during
2009–10 our focus was on rationalising and restructuring the business.
This resulted in an immediate improvement in profi tability and places
Post Logistics on a growth trajectory. During this busy year of
operational reorganisation, we maintained our excellent standards
of on-time delivery (96 per cent) and order accuracy (99.5 per cent).
Among key 2009–10 activities aimed at improving productivity,
Post Logistics:
• vacated several warehouses, consolidating the business
at other facilities
• outsourced major capital city deliveries to Messenger Post Couriers
to reduce capability replication
• exited arrangements with unprofi table customers
• successfully trialled a new 3PL IT system, Accellos, and implemented
with a major new customer, BIG W (various legacy systems will be
replaced by Accellos from 2010–11 onwards)
• prepared for the transfer of all logistics assets to a single entity,
Post Logistics Australasia (with benefi ts including single systems
for administrative functions such as payroll and human resources).
Late in the fi nancial year, we began refocusing on business development,
particularly in the areas of international logistics and online trading.
We are strengthening our collaboration with Sai Cheng Logistics
International, our joint-venture partnership in China that enables us
to provide end-to-end solutions, and expanding our e-tailing footprint
by combining our logistics skills with Australia Post’s dominance of
last-mile-to-consumer deliveries. A signifi cant success in this area
was Post Logistics’ selection as the lead logistics and delivery
provider for BIG W’s new online shopping offer (see page 23).
Joint-venture partners
Star Track Express, Australian air Express
Australia Post is a joint-venture partner with Qantas in two express
delivery businesses. Australian air Express offers complementary
time-critical express linehaul and air delivery services. Star Track
Express specialises in transporting time-critical B2B freight, and most
of its business comes from its national express road freight service.
Sai Cheng
Sai Cheng, our joint-venture partnership with China Post, was
established in 2005. This collaborative effort benefi ts customers
common to both organisations, as it offers a reliable, cost-effective
supply-chain solution between manufacturers in China and customers
in Australia and New Zealand. This capability also extends into the
United States, Europe and Japan.
With the ongoing challenges of strong competition in a subdued
global economy, Sai Cheng’s revenue still increased in 2009–10 and,
like Post Logistics, it is being positioned for growth. A signifi cant
new customer is Australian clothing manufacturer Pacifi c Brands,
whose labels include Bonds and Hard Yakka. Sai Cheng, together with
Australia Post businesses such as Post Logistics, delivers an integrated
supply-chain solution from manufacturers in China to retailers in
Australia, resulting in effi ciencies and cost savings for Pacifi c Brands.