According to a new research report by the market research and strategy consulting firm Graphical Research, Conveying Equipment Market size was valued USD 34 billion in 2017.
The expanding construction industry, which itself was worth nearly USD 9.5 trillion in 2015, will positively impact conveying equipment demand over the coming timeframe. Surging applications in the automotive industry for manufacturing and shipment of vehicles will generate heavy demand for conveyor systems, in turn influencing the market size. In addition to this, rising e-commerce and the food & beverages industry, which in turn demands simultaneous production and delivery of goods, will also be lucrative sectors contributing towards conveying equipment market growth.
Stringent government regulations to ensure employee safety is another vital factor fuelling the industry size. For instance, OSHA (occupational safety and health administration) has restricted human exposure to harmful work environments, which has made it mandatory to install these systems across such work spots, thereby boosting the industry’s growth trends.
However, tight supply of raw materials such as steel, polyester, cotton, rubber and coated fabrics over the coming years may inhibit industry progress. Bulk handling conveyors are estimated to register a CAGR of around 2% over 2018-2024. These are mainly used for loading and unloading of goods. Some of the bulk handling products include belts for coal, ash handling systems, coal handling systems, rotary air lock, truck loading machine, rotary air valve, truck loaders, and rotary feeder. Countries such as China and India, where coal is used as a fuel on a large scale, will contribute significantly towards bulk handling conveyors’ market growth. Conveyor system market share for durable goods is projected to surpass USD 15 billion by 2024. The growth can be attributed to the growing industrialisation and shifting focus towards bulk production to minimise production time and costs. Conveying equipment market size for non- durable goods will register a CAGR of around 1% over 2018-2024, driven by increasing demand across food & beverages industry.
Geographically, the market is segmented into North America, Asia Pacific, Latin America, Europe, and MEA.
APAC conveying equipment market size is estimated to grow at a CAGR of around 2.5% over 2018-2024, driven by favourable regulations, increased infrastructure spending and growing industrialisation across this region. India and China are estimated to drive the region’s growth.
US conveying equipment market will witness a significant growth over the forecast timeframe, catalysed by the expansion of the automotive and aerospace industries across this region.
The European market is poised to grow noticeably over the projected timeframe, driven by the growing automation in automotive and manufacturing industries. Germany and France will be the major revenue pockets.
Key industry participants are Sandvik, Dematic, Rexnord, Nordstrong Equipment, Intelligrated, Daifuku, Webster, Richards Wilcox, Hitachi, FMC Technologies, and Siemens.
The report can be viewed here.
Australia’s national science agency conducted a pilot study in 2018 using its computer logistics tool TraNSIT (Transport Network Strategic Investment Tool), along with extensive industry engagement, to focus on Parkes to Narromine in Central West NSW.
Researchers identified a baseline of existing freight movements in this area to estimate the potential transport cost savings for the entire Inland Rail project, marking the first time such a detailed analysis on road to rail supply chains in Australia has been completed.
They considered horticulture and processed agriculture such as meat, rice and dairy products.
The analysis showed if existing agricultural road trips were shifted to Inland Rail, the agricultural industry could save between $64 to $94 per tonne (depending on back-loading).
This equates to about $70 million in reduced transport costs per year based on the shift of 923,000 tonnes of horticultural and processed agriculture to the lower cost transport option that Inland Rail provides.
Additional analysis revealed that if existing coastal rail trips shifted to inland rail, this would result in an estimated saving of $28 to $35 per tonne.
“Our research has shown that Inland Rail would bring an improvement in rail travel time and transport cost, particularly important when considering perishable products.
This would make it a lot more competitive with the travel time advantages of road transport,” CSIRO TraNSIT leader Dr Andrew Higgins said.
Parkes to Narromine was chosen for the case study as it is the first section of track to undergo construction. There’s also a large number of supply chains in this pilot area involving hundreds of stakeholders.
“A big cost in food production is transport, particularly given the large distribution of where and when it is grown across Australia, and the long distances to major domestic markets, often over 1000 kilometres,” Dr Higgins said.
“These type of savings with Inland Rail would mean food companies would have lower cost access to markets further away than they supplied to in the past.
“The benefit is for those selling to market, basically large farming corporations, food companies and those behind processing facilities.
“You’d expect the savings would then be passed back onto farmers.”
The Australian Government has committed $9.3 billion to complete the 1,700 kilometre spine of Australia’s freight rail network that will connect Melbourne to Brisbane in under 24 hours.
As a next step, TraNSIT will now be applied to the broader Inland Rail corridor (commencing with the southern corridor from Narromine to Seymour) to obtain even more detailed cost savings across a broader range of commodities.
New commodities will include grains, cotton, livestock, wool, minerals and general freight.
TraNSIT has been used in previous research to test the benefits of transport infrastructure in regard to upgrading roads in Northern Australia, and calculating agriculture and forestry transport benefits for industry and various levels of government.
The TraNSIT computer modelling tool works by analysing every possible combination of transport routes and modes (road and rail) and determining those that optimise vehicle movements between enterprises in the agriculture supply chain.
Drakes deli team member and AFLW player Ebony Marinoff.
Australia’s largest 100% family-owned meat processor, Thomas Foods International, and largest independent grocery retailer, Drakes Supermarket have signed on as members of the blockchain-based food ecosystem IBM Food Trust. The successful pilot can trace the entire lifecycle of a food product, from region to plate, and update the record in real time. The two South Australian organisations are the first in Australia to pilot IBM Food Trust using the IBM Blockchain Platform, reducing traceability times from three days to three seconds.
The pilot involved tracing the origin of a piece of steak back to one of four individual farms. IBM Food Trust uses blockchain technology to enable participating retailers, suppliers and growers to collaborate based on a shared view of food ecosystem data to enable greater traceability, transparency and efficiency. This is important as it provides increased data granularity, which is an enabler for several use cases. Firstly, in the event of fast, surgical recalls, customers can quickly identify the amount of product at risk with minimised false positives. Secondly, product differentiation, which allows retailers to prove the provenance and history of an individual cut of meat.
Thomas Foods International (TFI) and Drakes Supermarket have been testing IBM Food Trust for the past three months to deliver improvements in day-to-day operational efficiencies. By removing data silos within the organisations and enabling a high level of data granularity, the pilot has enabled data to be shared across organisations. TFI and Drakes are able to upload data into a shared platform and the lifecycle of the products being traced has been mapped across the organisations, allowing a product to be tracked as it moves through the supply chain. IBM Food Trust members contribute data to the network
Participants such as TFI can upload their data and share with other organisations within their ecosystem. Organisations within the same supply chain can leverage the information of the partners to establish a single, shared version of truth.
Simon Tamke from Thomas Foods International said: “By maintaining the individual data relating to each product instead of moving to data about grouped products, we are achieving a greater understanding of how each food item is moving through the supply chain. This added level of transparency and verifiability will reinforce customers’ and consumers’ confidence in the provenance of our product and is made possible by blockchain technology.
“We are pleased with the steady progress of our blockchain collaboration with IBM, while we continue to receive very positive feedback from the industry and customers,” he added.
Head of Blockchain at IBM Australia and New Zealand Rupert Colchester said: “We see blockchain as a potentially game-changing technology for food traceability. Drakes and Thomas Foods have demonstrated how different players in a single supply chain can securely share data and key events, bridging organisational boundaries for the good of both consumers and the benefit of their own business processes. We expect to see more of this collaboration in the coming year, with groups of partners working together for the benefit of the entire food industry.
“Transparency and traceability are the key to many industries now, and none more so than in the critical issues of food safety and provenance.”
Tim Catwright from Drakes Supermarket said: “The greater level of granularity since adopting IBM Food Trust has enabled the traceability of a food package across the supply chain, reducing the time required to identify the origin of a product from days to just seconds.”
A new report by Infrastructure Partnerships Australia and BIS Oxford Economics’ shows the goods travelling in the belly of international aircraft arriving and departing Australia are worth a massive $109 billion annually.
The 2019 International Airfreight Indicator, the latest report in Infrastructure Partnerships Australia’s data and measurement series, reveals that one in every five dollars of Australia’s traded goods travels via air.
“Every day, more than 550 international flights arrive and depart Australia, yet until now, we have been remarkably blind to the value, the type of commodity, and the economic contribution of goods that travel in the belly of these aircraft,” said Infrastructure Partnerships Australia chief executive Adrian Dwyer.
“The 2019 International Airfreight Indicator shines a light on a multi-billion industry that has historically gone unnoticed in our broader trade debate.
“The indicator shows that airports are crucial to our trade story, and the cargo transported beneath passengers is vitally important to airlines, airports and the Australian economy.
“Last year alone, $109 billion of international trade passed through Australia’s airports, with airfreight set to top $114 billion this financial year.
“Whilst airfreight only represents 1 per cent of Australia’s trade volume, it punches well above its weight in value.
“One in every $5 of Australia’s imports and exports travels via our airports – making the airfreight sector one of the largest value contributors to Australia’s trade position.
“In a period of heightened trade tensions and structural economic change, it’s critical that we use data like that presented in the 2019 International Airfreight Indicator to improve the way we plan, regulate and invest in our freight sector.
“Without useful data to examine and measure our freight sector we will be flying blind on our international trade.
“That is why we have called on Government to establish a dedicated freight body to independently measure and publish detailed analysis of the overall performance of our logistic and supply chain networks,” Mr Dwyer said. Some of the findings:
In FY2017-18, $109 billion of international trade passed through Australia’s airports, with more than 96 per cent of international airfreight passing through the four main capital city airports – Sydney, Melbourne, Brisbane and Perth.
Whilst airfreight only represents 1 per cent of Australia’s trade volume, it represents 21 per cent of goods in trade value.
The amount of goods flowing in and out by air is now 70kg for every person – a 60 per cent rise in the last five years. This reached a record high over FY2017-18.
More than 80 percent of our airfreight is carried in passenger aircraft, with the balance carried in dedicated freight aircraft.
All delivery and assembly vehicles at IKEA are to be electric by 2025 as part of the ambitious IKEA People and Planet Positive Strategy. IKEA Australia has announced a commitment to use only electric vehicles for all of its operations and services by 2025, with the roll out starting immediately. In partnership with transport service providers, the roll out will see electric vehicles (EV) used for home deliveries and assembly services with a vision to create a better everyday life for many people.
IKEA will be the first home furnishing company in Australia to have EV last-mile deliveries and assembly services, emphasising its commitment to lower its carbon footprint and to be an industry leader in helping people and planet. The announcement is part of the business’s goal to work with local partners and customers to be Circular and Climate Positive.
Ingka Group is a member of The Climate Group’s EV100 initiative for accelerating the global shift to electric vehicles, and as part of its global EV strategy, by 2020 one quarter of all customer delivery vehicles will be electric, with the transition to electric vehicles complete by 2025. IKEA China has already achieved 100% EV deliveries in Shanghai.
In Australia, there are currently seven IKEA EV on the road, which are owned and operated by its service providers based in Sydney, Melbourne and Perth. Six of the EV fleet are currently responsible for last mile delivery.
A trial of the first of these EV, conducted since April 2018 across IKEA stores in Victoria, has seen a total of 3,500 deliveries to customers. IKEA aims to reach a 5% EV roll out in conjunction with its partners in FY19, 10% in FY20 and 100% in FY25. Based on the manufacturers’ specifications, one truck is estimated to save 36.3 metric tonnes of CO2 annually.
IKEA Australia country manager Jan Gardberg said: “At IKEA we want to drive positive change. That’s why we are committed to achieving zero emissions from delivery vehicles and ensuring 100% of our fleet will be electric vehicles.
“This is just one of the many initiatives and ambitions we have in place as part of our 2030 People and Planet Positive Strategy. Our end goal is to have a positive impact on people and the planet, and while IKEA is a large global organisation, we can’t do this alone. We’re excited to be partnering with many like-minded organisations in Australia and around the globe to help us create impact and drive positive change.”
The move has been welcomed by The Climate Group. Head of EV100 at The Climate Group Sandra Roling said: “As a member of our EV100 initiative, IKEA is leading the way in making the switch to electric transport. It is great to see the implementation of their global commitment to drive change around the world.
“Global consumer brands like IKEA have a crucial opportunity to inspire faster action on electric transport, while showing their customers the wider societal benefits it brings.
“We want to see many more companies in Australia follow IKEA’s lead.”
The EV strategy is part of IKEA’s wider Global People and Planet Positive Strategy. The strategy sets the direction for all IKEA franchisees and covers three focus areas:
Healthy & Sustainable living – inspiring and enabling more than 1 billion people to live a better everyday life within the limits of the planet.
Circular & Climate Positive – transforming into a circular business and becoming climate positive by reducing more greenhouse gas emissions than the IKEA value chain emits, reducing the climate footprint of IKEA products and operations in absolute terms.
Fair and Equal – creating positive social impact for everyone across the IKEA value chain and in all areas of the IKEA business.
In addition to the EV vehicle rollout, the IKEA Global People and Planet Positive Strategy includes commitments to:
Removing all single-use plastic products from the IKEA range globally and from customer and co-worker restaurants in stores by 2020
Designing all IKEA products with new ‘circular economy’ principles, with the goal to only use renewable and recycled materials
Offering services that make it easier for people to bring home, care for and pass on products
Increasing the proportion of plant-based choices in the IKEA food offer, such as the veggie hot dog launching globally later this year
Becoming climate positive and reducing the total IKEA climate footprint by an average of 70% per product by working together with home furnishing suppliers across their factory operations
Achieving zero emission home deliveries by 2025
Expanding the offer of affordable home solar solutions from five IKEA markets to 29 IKEA markets by 2025.
Toll’s custom-built Nike warehouse in Melbourne’s Altona North has become the first-ever facility in Australia to achieve a whole-of-building carbon neutral certification under the National Carbon Offset Standard (NCOS).
Toll said certification of the Toll-Nike logistics facility, owned by Stockland, caps off its significant investment in energy efficiency at the site, which was named Best Industrial Project at the National Energy Efficiency Awards in 2017. The site’s energy efficiency program featured upgrades to a 2.5 kilometre long conveyor system that is powered by 145 individual electric motors, and the retrofitting of 1,300 light fixtures with high-efficiency LED. This has led to a halving of the site’s total electricity consumption, exceeding the greenhouse reductions required by NCOS.
The site has also received a Green Star Performance rating, the first Green Star rating for Nike and Toll, and the first in Stockland’s Logistics portfolio.
Nike’s operations director Marie Varrasso said the success of the facility reflects the company’s commitment to reducing its carbon footprint while delivering efficient products and savings that can be passed on to its customers directly.
“Through this collaboration continuous improvements have been introduced into the supply chain, which ultimately benefits Nike’s footwear, apparel and equipment customers. It’s a unique relationship, with innovation at the heart of everything we do,” said Ms Varrasso.
Toll Global Logistics president Chris Pearce said it was the partnership between Toll, Nike and Stockland that made the carbon neutral certification and Green Star rating possible.
“Toll and Nike’s partnership began when this facility was built in 1999. It was the first distribution centre to be built by Toll’s specialised warehousing division and, at the time, this type of supply chain asset was virtually non-existent in the market.
“It’s fitting that almost 20 years on, Nike, Toll, and Stockland have been awarded this landmark certification – a testament to our continuous innovation. This is a milestone achievement for all and demonstrates our collective commitment to reducing environmental impacts and introducing smarter, more sustainable solutions across our operations,” added Mr Pearce.
The Toll-Nike facility provides specialised warehousing, picking and dispatch capable of handling more than 27,000 stock keeping units (SKU) and two million units of stock. The 18,000 sqm warehouse and fit-out were designed with environmental efficiency in mind and features:
Translucent roof sheeting – to maximise daylight so warehouse lighting can be switched off when ambient light is sufficient.
Energy-efficient lighting systems –powered by the latest LED technology suited to Nike’s warehousing needs. The system also improves visibility and safety, and motion sensors have been fitted to limit power usage to occupied areas.
Roof insulation – to assist with temperature control.
An optimised conveyor system –rewired and reprogrammed to operate in relation to product volumes, eliminating unnecessary movement.
Toll and Nike have offset the remaining greenhouse emissions generated by the building by investing in forest conservation projects in Tasmania as well as in an energy recovery waste water treatment plant in Thailand. These projects protect local biodiversity and native species support jobs in local communities and reduce greenhouse gas emissions.
Australian industry groups have joined together rejecting the flawed biosecurity levy. They have issued the following statement:
The Australian Government announced a biosecurity levy in the 2018 budget due to be implemented this July that is significantly flawed.
As Australian industry participants we would like to formally register our deep concern regarding the proposed biosecurity levy and urge the Government to remove it from the 2019 Budget.
Industry welcomes the Government’s recognition on the need for an Industry Steering Committee to better inform Government on improving the proposed Biosecurity levy scheme design.
This announcement is acknowledgement the current proposal is flawed and fails to recognise the damage the levy would do to the competitiveness of the freight supply chain, key export industries and the cruise sector, as well as the higher costs for consumers.
While no announcement has been made regarding the membership of this Committee or its Terms of Reference, it is essential that participants represent all industry groups who form part of Australia’s biosecurity and that this Committee be given enough time to consider and present a workable proposal for the Government’s consideration.
To ensure the Committee has flexibility in developing a fair and equitable model, it is therefore imperative that this Biosecurity Levy be removed from the 2019 Budget to enable this work to be completed.
The protection of our natural and agricultural assets is vital to this country from both an environmental and financial perspective. The industries represented in this statement are part of Australia’s biosecurity system and take their roles seriously. Which is why we believe in impactful and informed solutions to strengthening Australia’s biosecurity system.
Industry’s main concerns with the process to date are:
The rushed nature of a tax designed without fully understanding the potential for far-reaching economic consequences.
Additional and unnecessary costs – particularly to Australia’s tourism, manufacturing, agriculture, mining, energy and construction industries.
Flow-on costs to consumers.
Confusion as to why a new biosecurity tax is required over and above the Australian Government’s biosecurity charges that are currently in place for sea-freight (extensively reviewed in 2015-16) and the passenger movement charge for the cruise sector.
That a biosecurity risk assessment and regulation impact statement has not been undertaken by the Australian Government to inform the development of the proposed biosecurity tax.
A lack of clarity on how the Australian Government would collect the proposed tax.
No guarantee that all revenue raised by the proposed new tax would be used to support Australian biosecurity measures.
We urge the Government to remove the proposed levy from the 2019 Budget and provide a genuine opportunity to industry to help design a fair and equitable model that improves Australia’s biosecurity ability.
A national fuel reserve should be set up to ensure Australia has enough in case of emergency, Labor leader Bill Shorten has said. The announcement has been welcome by unions and industry alike.
Mr Shorten pledged a Labor government would create an entity to build up national fuel reserves and ensure they don’t fall below the international standard of 90 days’ supply.
He cited the Department of Environment and Energy, which estimates Australia, a net energy importer, has 19 days of automotive gasoline supply, 23 days of jet fuel supply and 22 days of diesel supply. You can read the T&L report on the subject here.
Mr Shorten said Labor planned to start building ‘tank farms’ to store the additional reserves in the next decade and also wanted to research alternative fuels. Trucking industry welcomes fuel reserve plan
Labor’s commitment to boost Australia’s fuel security would help protect the economy from international risks and uncertainty, the chairman of the Australian Trucking Association Geoff Crouch said.
The ATA represents the 50,000 businesses and 211,500 people in the Australian trucking industry.
“Fuel security is critical to trucking and keeping the Australian economy moving,” Mr Crouch said.
“Over 75 per cent of non-bulk domestic freight is carried by road, making fuel security vital to local supply chains and the ability of businesses and consumers to buy and sell goods.
“Last year, the International Energy Agency reported that Australia is vulnerable to unexpected changes in regional demand and disruptions in supply.
“The IEA reported that our stocks are at an all-time low, do not meet our international obligations and limit Australia’s options for addressing a disruption in supply.”
Mr Crouch welcomed Labor’s commitment that it would, if elected, commence detailed consultation around the design of a government-owned National Fuel Reserve to boost Australia’s fuel stocks of emergency reserves. MUA: “an essential step”
The maritime union has welcomed Labor’s commitment to create a government-owned National Fuel Reserve, describing it as an essential step to protect Australia from natural disasters or global crisis that could disrupt oil supplies.
The Maritime Union of Australia said Australia has been in breach of the International Energy Agency’s 90-day fuel stockholding obligation since March 2012, with figures released last month showed the country had just 22 days of petrol and 17 days of diesel on hand.
MUA National Secretary Paddy Crumlin said the fuel reserve commitment, along with Labor’s previous announcement of a National Strategic Fleet that will include oil tankers and gas carriers, were vital steps required to safeguard the security of an island nation that is reliant on fuel imports.
“For nearly seven years, Australia has been in breach of the IEA rules that are in place to ensure member nations have the capacity to weather unforeseen disruptions to the global supply chain,” Mr Crumlin said.
“Australia is the only developed oil-importing country without government-controlled stocks of crude oil or refined petroleum products, which has become more and more of an issue as the proportion of our fuel that is imported has risen to well over 90 per cent.”
Woolworths has been building on its solar power capacity with each new DC. Photo shows the Melbourne South Regional Distribution Centre under construction.
Woolworths has turned the first sod on a $57 million expansion of the existing Adelaide Regional Distribution Centre (ARDC).
The project is expected to create approximately 140 local jobs throughout construction as Woolworths and Hutchinson Builders partner with local businesses on the 14 month building works.
The expanded ARDC is designed to deliver fresher, faster and more frequent deliveries to supermarkets in South Australia and the Northern Territory by mid-2020.
On completion, the expanded centre will span 94,000 square metres – more than four times the size of Adelaide Oval – boosting the capacity of the temperature control and ambient warehouse sections of the Gepps Cross site.
These expanded operations are set to significantly strengthen Woolworths’ 7-day-a-week delivery of fresh produce to communities across South Australia as well as into the Northern Territory.
Woolworths chief supply chain officer Paul Graham said: “This $57m expansion of our Adelaide DC forms a key part of our ambition to create a best-in-class supply chain network for our customers.
“The site’s proximity to the Adelaide markets has always been a strength, but this upgrade will allow for more frequent and faster deliveries to our stores to help fulfil our fresh food promise.
“We partner with dozens of local suppliers in South Australia, connecting products from growing regions including the Northern Adelaide Plain, South Murraylands, Riverland, Mallee, the Lime Coast and Adelaide Hills, to our customers.
“We have a long and proud history in South Australia, and this investment demonstrates our commitment to continued growth in the state and local jobs.”
Sustainable energy will help power the expanded distribution centre with Woolworths to install 3,500 solar panels (1.6MVa system) across the rooftop. This is the largest solar installation in Woolworths’ Australian network, and larger than the current installation at Adelaide airport.
The $2.5 million solar installation will provide around one-fifth of the centre’s energy needs, and produce enough green energy to power the equivalent of 300 homes.
Construction of an expanded recycling facility for pallets is also part of the project, reflecting our commitment to further reducing plastics and cardboard within our supply chain.
The expansion of Adelaide Regional Distribution Centre is to be funded by landowner, Growthpoint Properties, under a new 15-year lease over the entire distribution centre.
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.”