Parcels save Australia Post profits

 
 
Performance highlights for the six months to 31 December 2018:

  • Group revenue was flat against last year at $3.6 billion, masking significant changes.
  • Group parcels contributed $1.9 billion, up 9 per cent, adding $25 million in profit.
  • Group letters at $1.1 billion, down 10 per cent, reducing profit by $102 million.
  • Group expenses contained at 2 per cent growth, including $121 million in productivity gains.
  • Reported profit before tax at $154 million, down 36 per cent, included positive one-offs. Profit after tax $118 million, down 45 per cent.
  • Australia Post is expected to make a modest full-year profit in FY19 given the continued impact of letter decline, economic headwinds and seasonality.

Australia Post has announced a profit before tax for the first half of $154 million, down 36 per cent year-on-year. This included $30 million of one offs. Underlying profit before tax was $124 million, down 38 per cent. Group revenue was flat at $3.6 billion.
The largest business segment, domestic parcels, performed strongly with revenue growing by 10 per cent, up $147 million, well ahead of the general retail market, which grew 2.9 per cent in the period. Group parcels profit grew by $25 million to $127 million. In December, Australia Post delivered a record 40 million parcels, up 12 per cent.
All Community Service Obligations were met or exceeded and customer service standards remained high for letters and parcels, including through extreme weather conditions across the country during the Christmas peak.
Group chief executive officer and managing director Christine Holgate said she was pleased with the continued strong performance of the parcels business, however, significant challenges remain for Australia Post with letters revenue now declining at the fastest rate in its history.
“Although we delivered 10 per cent growth in domestic parcels, well in excess of the growth rates of the economy and in a period of very strong competition, this could not make up for the profit decline in the letters business,” Ms Holgate said.
“Letter revenues are down 10 per cent or $125 million, which reduced profit by $102 million in the half.  This is after saving an estimated $50 million in delivery costs as posties carried 40 per cent of our parcels.
“Since the last increase in the Basic Postage Rate in January 2016, more than three years ago, our costs to deliver letters are up 10 per cent. The number of new delivery addresses has increased by 500,000, yet letter volumes have declined by 800 million.
“Australia Post will deliver more than two billion letters to almost 12 million homes and businesses this year. Although it is shrinking, letters is still viewed as a critical service by the overwhelming majority of Australians.”
Australia Post is an entirely self-funding business. Last financial year, Australia Post incurred an estimated cost of $404 million in delivering the letters service in accordance with its legislated community service obligations.
Group expenses were held at two per cent growth in the first half, underpinned by total productivity savings of $121 million. Independent research shows that Australia Post has improved its Total Factor Productivity at twice the rate of the overall economy and reserved letters at three times the rate.
Ms Holgate said the business was also making good progress on delivering on its strategic initiatives including:

  • Securing the historic Bank@Post agreement with CBA, Westpac and NAB, protecting critical banking services in Community Post Offices, particularly in regional and rural Australia. A further seven financial institutions have already committed to new Bank@Post terms: Suncorp, Resimac, Auswide Bank, AMP Bank, Maitland Mutual, Transport Mutual and ME Bank.
  • The first new major agreement with its important licensee partners in 26 years, providing technology and aligning payments to parcels and other growing services.
  • $64 million of investment in the operational network, including new processing equipment in Sydney, Melbourne and Brisbane enabling automated sorting of an additional 100 million parcels.
  • The fastest growing parcel product, Express, expanded in a trial to a further 500 postcodes.
  • Acquisition of remaining 60 per cent stake in Aramex Global Solutions, which provides end-to-end cross-border logistics and eCommerce solutions, supporting the international growth strategy.

“We have invested in both capability and capacity, without which our teams could not have delivered the Christmas Peak.  Our people were exceptional as they delivered through the most challenging weather conditions, including floods, bush fires and hail storms,” Ms Holgate said.
“Our Net Promoter Score with our customers is at a record high and complaints on Australia Post entities to the Postal Industry Ombudsman were down 31 per cent, although we recognise we still have much more work to do.
“The progress we have made against our strategic initiatives, coupled with the unwavering commitment of our extended workforce to serve the community, means we remain confident that Australia Post will play an important role for many years to come.
“Australia Post is on track to deliver a modest profit for the full year, in the face of ongoing market pressures in the traditionally quieter second half. Australia Post will release its full results in August.”

Infrastructure Priority List welcomed by the freight sector

The Infrastructure Priority List recently released by Infrastructure Australia (IA) has won widespread approval in the freight sector, including the Australian Logistics Council, Australasian Railways Association and the Australian Trucking Association.
ALC: The priority list highlights freight infrastructure opportunities
The Australian Logistics Council (ALC) said the Infrastructure Priority List released by Infrastructure Australia (IA) highlights continued need for targeted investment in freight infrastructure projects that will enhance supply chain efficiency and safety, and make Australia more internationally competitive.
“It is essential that Australia makes infrastructure investment decisions that are based on sound principles and evidence-based assessments regarding a project’s capacity to contribute to our economic strength, and liveability of our communities,” said ALC chairman Philip Davies.
“In the past, the Infrastructure Priority List has helped to build support for investment in critical freight infrastructure projects which are now being undertaken, including Western Sydney Airport, Inland Rail, the Moorebank Intermodal Terminal and more recently the Port Botany freight rail duplication, which was supported in the 2018 Federal Budget.”
“It is especially pleasing to note this year’s list again includes the development of a National Freight and Supply Chain Strategy as a high priority initiative.”
“To further boost the effectiveness of that Strategy when it is released later this year, ALC urges governments to prioritise investment in key freight-related initiatives IA has included in this year’s list, including:

  • Upgrading Chullora Junction to enhance Sydney’s freight rail network;
  • Constructing the North East Link in Melbourne to alleviate traffic congestion and enhance freight efficiency;
  • Pursuing a dedicated freight rail connection from Inland Rail to the Port of Brisbane;
  • Enhancing capacity and traffic flows on the Mitchell and Kwinana Freeways in Perth;
  • Completing the upgrade of the Adelaide North-South road corridor to enhance capacity and efficiency of freight movement to the airport and port precincts;
  • Investing in road and rail improvements on the Burnie to Hobart freight corridor;
  • Implementation of the Advanced Train Management System on the ARTC network; and
  • Establishing a national electric vehicle fast-charging network to overcome ‘range anxiety’ among freight logistics operators.

“Australia must do everything possible to eliminate capacity constraints in our freight networks if we wish to succeed in an increasingly competitive global market. Securing investment in these priority projects will help to deliver that outcome.”
ARA backs IA’s strong rail focus in Infrastructure Priority List
The Australasian Railway Association (ARA) has also welcomed Infrastructure Australia’s (IA) 2019 Infrastructure Priority List.
“IA plays an important role in identifying key infrastructure problems and opportunities to ensure investment is appropriately targeted to areas of greatest need,” said ARA CEO Danny Broad.
“The rail projects included in IA’s 2019 Infrastructure Priority List are important nation-building initiatives and are endorsed by the rail sector,” he continued.
“Pleasingly, there are more rail projects and initiatives in the report compared to the 2018 Infrastructure Priority List, with 54 of the 125 projects and initiatives rail-related.
“As Australia’s population grows, rail infrastructure will increasingly become the backbone to meet Australia’s growing passenger and freight needs. To manage the challenges posed in our cities and regions in the long-term, Australia will need to ensure that it continuously invests in rail infrastructure.
“We know that rail is an efficient, environmentally and socially beneficial mode of transport. We also know that rail has lower emissions than road transport, is safer and can help reduce congestion in our cities.
“The significance of these rail projects identified by IA warrants investment from governments at all levels. Our networks of infrastructure and services connect people and communities, support freight transport across the country, help deliver our resources to overseas markets and continue to generate economic growth and employment,” he said.
ATA welcomes updated Infrastructure Priority List
Infrastructure Australia’s updated Infrastructure Priority List illustrates the importance of evidence-based investment decisions, chairman of the Australian Trucking Association Geoff Crouch said.
“The Infrastructure Priority List provides critical focus on the need to invest in safer regional roads and fixing urban congestion,” Mr Crouch said.
“The new project calling for regional road network safety improvements to invest in fixing high-risk sections of regional roads and deliver safer road infrastructure is a critical priority.
“Infrastructure Australia reports that relative to population size, the number of fatalities in regional areas is over four times higher than for major cities.
“This project now requires government support across Australia, and the ATA strongly welcomes the inclusion of a similar new project by the NSW Government to make regional road safety improvements in NSW.
“Governments should also support the call for a roads network optimisation program to address urban congestion.
“First added to the priority list in 2016 but still without a government proponent, Infrastructure Australia has again reconfirmed the need for governments to make multiple, co-ordinated, productivity enhancements to the road network to reduce congestion.
“These investments should be based on data and seek to optimise traffic flows through investments such as intersection treatments, traffic light sequencing, clearways and incident management.”
The ATA also welcomes the continued inclusion and expansion of projects to address major road investment priorities.
“There’s a long list of proposed road, highway and motorway projects which would make a significant investment to improving safety, connectivity and productivity on the road network,” Mr Crouch said.
Future updates to the Infrastructure Priority List should expand the network-based focus on improving roads to include regional and outback highways and corridors.
“The need to make better use and enable more productive connectivity extends beyond our major cities and their rural hinterlands, and Infrastructure Australia should include network optimisation and access for investing in better regional and outback highways in future priority list updates,” Mr Crouch said.
 

CHR appoints Andrew Coldrey new vice president of Oceania

Global third-party logistics provider C.H. Robinson has named Andrew Coldrey as vice president, Oceania, following the retirement of Mike Smith in December 2018 after more than 30 years of tenure. Andrew will report to Mike Short, president Global Forwarding at C.H. Robinson.
“I’m excited to have Andrew lead the Oceania team, where his main focus will be to increase customer success, and create greater focus on C.H. Robinson’s global product development,” said Mike Short, president, Global Forwarding at C.H. Robinson. “Andrew’s expertise and leadership skills will drive regional growth and advancement of Global Forwarding within Oceania, in close alignment with his teams in Australia, New Zealand and the rest of the global network”.
Andrew has held various roles throughout the business, having started his career in freight forwarding with C.H. Robinson. Since 1995, he has been an integral member of the Oceania management team. He managed the New South Wales office, generated opportunity for regional growth as manager of international development, and led successful operational and commercial teams as regional director.
“I am thrilled to be leading the Oceania team, and I look forward to continuous learning, development and innovation in support of our people and customers,” Andrew said. “The greater focus of our operational and commercial teams will allow for more collaboration and overall business excellence.”
C.H. Robinson continues to deliver expertise and logistics services to global and local Australian and New Zealand companies. C.H. Robinson focuses on product development and innovation, which includes the expansion of Australian domestic services to include a local air service that complements coastal shipping. Further developments include customised technology that creates greater visibility for customers over their supply chains.
 

Budget must focus on freight: ALC

The Australian Logistics Council (ALC) has released its 2019-20 Federal Budget submission, saying this year’s Budget must establish the right framework to support the implementation of an effective National Freight and Supply Chain Strategy.
“The Federal Budget in April will be the last one delivered prior to the release of the National Freight and Supply Chain Strategy,” said ALC CEO Kirk Coningham.
“The ALC has been a long-term advocate for this strategy. Our members understand that a national economy needs to adopt a consistent national approach to freight movement.
“However, the best Strategy in the world counts for little if there are insufficient resources in place to support its delivery.
“Accordingly, ALC’s submission encourages the Federal Government to use this year’s Budget to establish the right frameworks to support the delivery of a Strategy that will meet the needs of our industry and the Australian economy as a whole.
“To help achieve this, ALC makes 19 recommendations addressing two core objectives – ensuring those responsible for implementing the strategy have adequate resources, and supporting specific infrastructure, safety and regulatory initiatives that will improve the performance of our supply chains.
“These include recommendations to support key Federal agencies, as well as state and local governments, in delivering significant reforms around planning, corridor protection, road pricing and data collection that will allow us to better monitor performance and more effectively target infrastructure investment.
“Additionally, there are specific recommendations to support crucial infrastructure and regulatory initiatives, such as better freight rail linkages to ports, infrastructure to hasten uptake of electric vehicles in the freight sector, maintenance of the industry Master Code for heavy vehicle safety, and development of a National Rail Plan that will finally deliver the regulatory consistency the industry seeks.
“Implementing these recommendations as part of the 2019-20 Federal Budget will significantly improve the efficiency and safety of Australia’s supply chains, and contribute to the delivery of a more effective National Freight and Supply Chain Strategy,” Mr Coningham said.
 

Electric trucks are the way to go: ALC

The Australian Logistics Council (ALC) is disappointed that the final report of the Senate Select Committee on Electric Vehicles has missed clear opportunities to boost the uptake of EV in the freight logistics sector.
“There is clearly a willingness within this industry to move towards greater use of EV in freight delivery. It is disappointing that the committee has not supported that positive attitude by explicitly addressing freight vehicles in its recommendations to the government,” said ALC CEO Kirk Coningham.
“It is especially perplexing that the committee recommends establishing national EV targets for light passenger vehicles, light commercial vehicles and metropolitan buses – but is silent on establishing a similar target for heavy vehicles.
“It is similarly disappointing that the report did not take the opportunity to recommend a review of the Australian Design Rules, to that they can better accommodate the unique size and shape of some electric freight vehicles.
“ALC is pleased that the report does make recommendations on some of the issues raised in our submission, including the need to facilitate the rollout of charging infrastructure and ensure the energy network is able to sustain a reliable supply of energy to power EV.
“However on the whole, these recommendations fall well short of the type of action that is needed to hasten the uptake of EV in the freight logistics sector.
“One opportunity that was clearly missed was a recommendation to establish a Low Emission Vehicle Contestable Fund, similar to one already operating in New Zealand.
“Indeed, the report specifically refers to the New Zealand fund in its commentary and notes its benefits – but does not follow through by recommending a similar initiative for Australia.
“Just last week, the New Zealand Government announced a further round of projects to be supported though its fund, including projects specifically focused on the freight sector designed to showcase the capabilities of long-haul heavy electric vehicles.
“Similar initiatives will need to be adopted in an Australian context if freight logistics operators are to be encouraged to incorporate EVs into their own operations. This is something ALC will be pursing in its pre-Budget submission and in ongoing discussions with the Federal Government.
“The ALC’s Electric Vehicles Working Group will continue to pursue these matters with all political parties in the lead up to this year’s federal election,” Mr Coningham said.

Australia Post to operate largest electric vehicle fleet

A new order for an additional 1,000 three-wheeled electric delivery vehicles (eDV) by Australia Post is set to make it the nation’s largest electric vehicle fleet operator.
Australia Post group chief operating officer Bob Black said the 1,000 eDV boost its existing fleet of electric postie vehicles – including electric pushbikes – and creates a range of benefits for posties, customers and the environment.
“We are proud to soon be operating Australia’s largest fleet of electric vehicles, and hope this will set the standard across Australia,” Mr Black said.
“With parcel volumes growing – on average, close to 10 per cent each year for the last three years – and letter volumes declining, we’re always looking for ways to ensure our posties continue to play an important and sustainable role in the community.
“These vehicles offer additional carrying capacity, so our posties can deliver more parcels than ever before directly to the customer’s door – and can perform additional functions, such as collecting mail from street posting boxes.”
Along with delivery benefits, Mr Black said the electric vehicles also offer added safety and environmental protections.
“The eDV are safer than the traditional motorcycle. They are easier to see on the road, more stable, have increased rider protection and lower on-road speeds, all of which reduce a postie’s exposure to incidents and serious accidents.
“We started trialling eDV in 2017 and we’ve since deployed them in all states. We have worked closely with our posties to make improvements along the way.
“Our posties love the eDV because they demonstrate our commitment to providing safer and more sustainable employment into the future, given consumers are sending fewer letters and relying more and more on their postie to deliver their parcels.
“They will also help us achieve our commitment of reducing our carbon emissions by 25 per cent by 2020.”
Deployment of the additional 1,000 vehicles is expected to start from June across all states.
Along with the additional 1,000 eDV Australia Post will also roll out an additional 4,000 electric pushbikes, bringing its total to 5,980 over the next three years.
 

Coles signs on the dotted line for $950m automation project

Coles Group Limited has executed definitive contracts with WITRON Australia Pty Ltd to develop two new automated ambient distribution centres, one each in Queensland and New South Wales.
WITRON Australia is a subsidiary of WITRON Logistik + Informatik GmbH, the German-based builder of automated distribution centres that deliver improved product availability for customers and cost efficiencies.
Concurrently, Coles has also entered into agreements for lease catering for the development of the distribution centres at Redbank in south-west Brisbane with Goodman Group, and Kemps Creek in western Sydney, with a joint venture of Goodman and Brickworks Limited.
The term of each lease will be 20 years.
The agreements with WITRON, Goodman and Brickworks are subject to the satisfaction of certain property related conditions precedent including development approvals.
Coles CEO Steven Cain said: “With the signing of these important contracts, Coles is one step closer to implementing a key element of its supply chain modernisation strategy. This will provide a safer working environment for our team members, lower supply chain costs, enhance our overall business competitiveness and make life easier for our customers by having the right offer in the right location.”
The total capital expenditure relating to Coles’ supply chain modernisation project for the two automated distribution centres is approximately $950 million over six years.
Coles also said it will recognise a pre-tax provision of $146 million in its 2019 interim result as a significant item, relating to lease exit costs and redundancies for existing distribution centres that will be closed over a five year period.
 
 

Bridgestone to buy TomTom for A$1.45bn

Bridgestone Corporation (Bridgestone) has announced that its subsidiary Bridgestone Europe NV/SA will acquire TomTom Telematics, the digital fleet products business, for a cash consideration of €910 million (AUD 1.45 billion). The transaction is anticipated to be completed latest in the 2nd quarter of 2019, subject to the satisfaction of customary closing conditions such as regulatory approvals.
TomTom is the number one provider of digital fleet products in Europe, a marketplace with very diverse in legal, commercial and cultural requirements. Its digital fleet business has successfully demonstrated its ability to operate in complex and demanding market environments and has continued to strengthen its potential to expand globally.
TomTom’s digital fleet product range offers a platform for connected vehicles enabling safer driving, improving productivity and optimising uptime for personal and commercial mobility. Combining this digital fleet business with Bridgestone’s tyre expertise and global service network creates an opportunity that accelerates the company’s effort to become a key partner in the Mobility as a Service (MaaS) landscape with leading tyre products and services.
In addition to reinforcing Bridgestone’s broad and leading portfolio, this strategic investment will also strengthen its position as an innovative leader in the field of tyre design, and tyre predictive maintenance service. Bridgestone will gain unprecedented insights into vehicle and tyre operating conditions and be able to leverage a growing installed user base of 860,000 vehicles communicating 200 million data points per day.
With this acquisition, Bridgestone adds core components to its Tyre and Diversified Products as a Solution (Bridgestone T&DPaaS) strategy.
 

Boeing goes pilotless

Boeing has successfully completed the first test flight of its autonomous passenger air vehicle (PAV) prototype in Manassas, Virginia. Boeing NeXt utilised Boeing subsidiary Aurora Flight Sciences to design and develop the electric vertical take-off and landing (eVTOL) aircraft and will continue testing to advance the safety and reliability of on-demand autonomous air transportation.
The PAV prototype completed a controlled take-off, hover and landing during the flight, which tested the vehicle’s autonomous functions and ground control systems. Future flights will test forward, wing-borne flight, as well as the transition phase between vertical and forward-flight modes. This transition phase is typically the most significant engineering challenge for any high-speed VTOL aircraft.
“In one year, we have progressed from a conceptual design to a flying prototype,” said Boeing Chief Technology Officer Greg Hyslop. “Boeing’s expertise and innovation have been critical in developing aviation as the world’s safest and most efficient form of transportation, and we will continue to lead with a safe, innovative and responsible approach to new mobility solutions.”

Powered by an electric propulsion system, the PAV prototype is designed for fully autonomous flight from take-off to landing, with a range of up to 50 miles (80.47 kilometres). Measuring 30 feet (9.14 metres) long and 28 feet (8.53 metres) wide, its advanced airframe integrates the propulsion and wing systems to achieve efficient hover and forward flight.
The test flight represents the latest milestone for Boeing NeXt. The division works with regulatory agencies and industry partners to lead the responsible introduction of a new mobility ecosystem and ensure a future where autonomous and piloted air vehicles safely coexist. In addition to the PAV, the Boeing NeXt portfolio includes an unmanned fully electric cargo air vehicle (CAV) designed to transport up to 500 pounds (226.80 kilograms) and other urban, regional and global mobility platforms. The CAV completed its first indoor flight last year and will transition to outdoor flight testing in 2019.
“Boeing was there when the aviation industry was born and in our second century, we will unlock the potential of the urban air mobility market,” said Steve Nordlund, vice president and general manager of Boeing NeXt. “From building air vehicles to airspace integration, we will usher in a future of safe, low-stress mobility in cities and regions around the world.”

Open-road automated vehicle trials to start in Victoria

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Cutting-edge automated vehicle technology will be tested in rural Victoria this year in the first on-road trial approved under the new Automated Driving System (ADS) permit scheme.
Acting Premier Jacinta Allan has announced that Bosch has been awarded $2.3 million from the Connected and Automated Vehicle (CAV) Trial Grants Program and granted the state’s first ADS permit for on-road testing of highly automated driving systems.
Last year, Victoria finalised regulations to support the ADS permit scheme, which authorises the use of automated vehicles for testing and development on our roads.
Bosch is currently developing its automated vehicle technology and will begin testing on high-speed rural roads later in 2019. The aim of the Bosch trial is to use the state-of-the-art technology to improve safety on rural Victorian roads – where drivers are five times as likely to be killed in a crash than in metropolitan areas.
The testing will be conducted on roads that expose the automated vehicle to a range of different conditions including traffic, weather and infrastructure.
The $9 million Connected and Automated Vehicle Trial Grants Program is funded through the Andrews Labor Government’s $1.4 billion Towards Zero Action Plan.
In late 2017, VicRoads called for expressions of interest from companies, industry bodies and other transport technology organisations to apply for funding to spur the development of these emerging technologies. which will lead to reduced deaths and serious injuries. Other successful applicants will be announced soon.
The trials will support Victoria’s readiness for CAV technologies and the knowledge gained will provide a better understanding of the infrastructure required to get these vehicles on the road, maximising their safety benefits.

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