Australia Post to invest $2 billion in expanding parcel locker, digital mailbox network

Australia Post will invest more than $2 billion to digitise its current operations, with plans to expand its parcel locker system to 80% of the population by 2014 and create a digital mail service similar to one already announced by other companies earlier this year.

The announcement was made this morning as part of the organisation’s annual report, which showed an annual profit of $281 million, up 16%, although regulated mail has reported a loss of $148 million as traditional mail usage continues to fall.

The investment comes as a number of organisations are creating new parcel delivery options in an attempt to curb the “failed delivery” problem – people who don’t receive packages bought online because they aren’t at home to receive them.

It also comes after the organisation said earlier this year it’s losing $70 million every year because of the huge amount of parcels Australia Post is distributing every year.

Managing director and chief executive Ahmed Fahour announced this morning the $2 billion investment, which is about 50% above normal CAPEX rates, will be used to expand the parcel delivery network.

“Without this investment, we cannot sustain the enormous demand for parcel services and continue the high level of service and reliability we’ve always delivered to Australians,” Fahour says.

“This year we will invest significantly to ensure we deal with the Christmas rush effectively. Last year we delivered more than three million parcels in December alone. This Christmas will be even busier.

“This investment will provide the infrastructure and delivery options to ensure Australian businesses and consumers can reap the benefits of the digital economy.”

Fahour also said this Christmas will see Australia Post deliver parcels to households on weekends during November and December, extend opening hours for parcel collection, extend retail trading hours for 450 retail outlets, and extend weekday operating hours for call centres.

And over the next four years, Australia Post will extend the parcel locker system so that by 2014, 80% of Australians in metropolitan areas will be within a 10-minute drive of a parcel collection location.

The system works by having users receive a PIN code which they can use to unlock a locker and retrieve their parcel.

The expansion plan comes just after recent figures from the Commonwealth Bank show domestic retailers hold 60% of the online sales market.

These retailers have expressed their frustration at having to deal with clogged mail rooms, as shoppers have parcels delivered to work rather than home so they can receive them during the day, rather than retrieve them at the weekend.

Australia Post also said during its parcel locker trial that most people have picked up their parcels within six hours of parcels being delivered to their locker.

The other part of the massive investment is in the digital mailbox system. Australians will be able to log on to the Australia Post website and retrieve correspondence from banks, insurance companies and government agencies.

It’s similar to another system being developed by Computershare, and Fahour says the move is aimed at “future proofing our business”.

“Just as the traditional letterbox has been a vital part of people’s communications for the past two hundred years, we think the Australia Post Digital MailBox will become an integral part of everyday life,” he said.

“All of these initiatives will ensure Australia Post remains the cornerstone of the community, as well as giving Australian consumers and businesses every opportunity to reap the benefits of the digital economy.”

Another company, run by Yellow Brick Road chief executive Mark Bouris, is also expanding its own parcel locker system, as demand increases for parcel delivery systems.