AusPost has a Red-Letter Day as Big Rivals Challenge with Dog Deliveries

Posties are delivering billions of parcels and fewer letters, but Australia Post is determined to deliver for another 200-plus years.

A “two-speed” business resulted in AusPost declaring another annual loss on Aug. 30, as revenue from parcels continued to grow with more than 2.5 billion delivered each year, while letter deliveries fell to 1950s levels.

The loss of $88.5 million (US$60.2 million) for the 12 months to June 30 followed a $200.3 million (US$136.2 million) deficit a year earlier.

But chief executive Paul Graham said it was a “solid result” against stiff competition from large, well-funded foreign multi-nationals and other private operators.

“There’s an incredibly aggressive and competitive market out there—companies like Amazon are spending billions and billions of dollars to compete,” Graham told AAP.

Domestic parcel volumes increased by 1.8 percent, contributing to parcels revenue of $6.46 billion (US$4.4 billion), an increase of 3.3 percent.

“We’re holding our own,” Graham said, as the bottom line improves.

“We’ve been around for 215 years and we’ve got no other goal than being around for at least another 215 years,” he said.

Adding to the country’s largest electric delivery fleet of more than 5100 vehicles, AusPost this week plugged in 175 UBCO electric motorbikes.

Capable of reaching speeds of up to 80 km/h, the e-bikes will help electrify routes that were previously challenging for three-wheel electric delivery vehicles to access.

“We also think it will help us with our dog bites, because the dogs do react to the sound of a motorbike—if they can’t hear it, maybe they won’t be curious and come out to see what’s going on,” Graham said.

With more than 80 percent of Australian households shopping online, he said the e-commerce business was expected to double in the next 10 years.

Baby boomers might be splurging but cash-strapped younger generations were looking for budget buys and comparing prices far more than when times were less stressful, he said.

But fewer customers are sending letters and visits to post offices continue to decline.

Parcels and services revenue rose to $7.42 billion (US$5 billion), while losses in the letters business were $361.8 million (US$246 million) as letter volumes fell 12.9 percent to 1.76 billion.

The average household now receives fewer than two stamped letters a week, which is expected to halve in the next five years.

Over-the-counter transactions have fallen by 4.9 percent and by more than a quarter (28.7 percent) since 2019.

Group revenue rose 1.8 percent to $9.13 billion (US$6.2 billion) and the cost of subsidising letter delivery under federal obligations was $447 million (US$303.9 million).

Graham said the government understood the critical role played by AusPost and more than 64,000 staff, especially in regional and remote communities, but there was no government funding for the “significant burden” of maintaining a universal letter price.

“We have a commitment to have 4000 post offices—2500 regional, rural and remote—and that’s why we were pleased with the government’s first phase of regulations that allowed us to deliver mail on alternate days and increase the price of a stamp,” he said.

But investing more in the growing parcel business was expected to be the best bet for sustaining deliveries for another 200 years.