As digitisation drives a long-term decline in letters – down 66% from their peak in 2007-08 – and dramatic uplift in online shopping and parcel deliveries, the Federal Government says it’s looking for ways to modernise Australia’s postal system.
The government wants to improve the flexibility and reliability of parcel delivery, enabling Australia Post to remain a competitive player in the lucrative parcel delivery market, and is seeking responses to its discussion paper until 27 April 2023.
Acting Minister for Communications Mark Dreyfus tells Cosmos “the Albanese Government is committed to helping Australia Post adapt to changes in technology and commerce, and consumer expectations.”
Australia Post has invested more than a billion dollars in the past three years in new parcel processing facilities, scanning technologies and expanding its electric delivery fleet, the discussion paper says.
But some experts say the future of post lies in technological change – from warehouse automation to drone and footpath robot delivery – trends not currently considered by the discussion paper.
Australia parcel delivery trends
Australia is one of thirteen key parcel shipping markets tracked by global shipping company and analyst Pitney Bowes.
Consumer shopping patterns have “drastically shifted towards online retail channels” as a result of COVID-19 the company’s President of Sending Technology Solutions, Shemin Nurmohamed says.
Pitney Bowes annual ‘Parcel Shipping Index’ is a key source of data on parcel volumes, revenue and carrier shares across thirteen major markets, including Australia.
The most recent index shows 1.1 billion parcels were delivered across Australia in 2021 – roughly equivalent to 2.9 million packages delivered every day – a 3% increase on 2020.
On average Australians are ordering 42 parcels per person annually, slightly above the global average (41). Yet Australia is a lucrative market for parcel delivery, with one of the highest revenues per parcel.
Nurmohamed says parcel delivery is quite consolidated in Australia. Pitney Bowes’ data shows Australia Post controls around half of the parcel delivery market (49%), a significantly higher market share than second player, Toll (7%) and third, TNT (3%).
Professor Rico Merkert, an expert in transport logistics and supply chains at the University of Sydney agrees “the e-Commerce boom is not going to go away”.
“I think people got accustomed to ordering online, they have more trust in the technology now,” he says.
Merkert says there are a number of consumer trends working in favour of technologies like drones, footpath robots and greater automation.
For example, he says, there’s a shift towards smaller, lighter online purchases and younger generations who want things delivered fast.
At the same time, sustainability concerns are supporting a shift to electric transport modes, a driver that’s already propelled Australia Post’s uptake of more than 4,100 electric vehicles across its fleet of bicycles, three-wheelers and trucks, but which could also support drones and delivery robots in future.
From delivery drones …
Simon Rossi, General Manager for Wing Australia expects to see drone delivery “co-exist alongside and complement other delivery methods” such as traditional parcel delivery modes.
“Our drones typically carry around 1 kg and could be an effective complement to the traditional post in a multi-modal delivery environment for urgent parcel deliveries in the future,” he says.
Wing – which like Google is a subsidiary of Alphabet Inc – made more than 100,000 drone deliveries in Australia during 2021. Its operation based in Logan, Queensland has become so successful, Wing calls it the ‘drone delivery capital of the world’.
The company is expanding its retail delivery operations, through partnerships with retail property groups Vicinity Centres and Mirvac and it recently announced a new automated delivery network, allowing it to expand deliveries and meet peaks in demand across a much larger metro area or region.
Rossi says, “this is a fundamental change from the current model as this will allow the drones to continue deliveries throughout an entire day, without ever returning to the original point of origin.”
Rossi says the company operates within strict air safety regulations.
The rollout of drone delivery hasn’t been entirely without incident. Some residents are concerned about noise, and thousands lost power in September last year after a delivery drone flew into power lines.
Merkert says, while today’s drone delivery operations are mainly targeting niche markets, the technology holds significant promise as a means of low cost, fast parcel delivery that could ultimately “reach market shares of up to 80%”.
And he says the future of post might include “all sorts of drones – ground transport drones as well”. He is currently researching a range of autonomous transport modes – not just flying drones, but also footpath robots.
Read more: Posties preferred for parcel delivery
…. to footpath robots
In 2017, Australia Post trialled parcel delivery by footpath robot in the suburb of New Farm, Brisbane. Dubbed the ‘esky on wheels’, the autonomous robots successfully delivered 100 packages travelling some 140 kilometres without any technical or safety incidents, according to its 2017-18 annual report.
And while the local trial appears to have gone no further, footpath robots are rolling out as a ‘last mile delivery’ solution across many European and North American cities.
An increasing number of post and parcel carriers are trialling these small, boxy, wheeled robots for parcel delivery.
Norway’s postal service, Posten Norge is trialling the robots in Oslo, Japan Post is delivering packages with the help of a little red postie robot in Toyko and American shipping company FedEx is trialling autonomous vehicles in Houston, Texas.
Starship Technologies – which operates the small, boxy robots in the US, UK, Germany, Finland and Estonia – has deployed 2,000 robots, completing four million deliveries, across more than 10 million kilometres.
One study reported in Cosmos suggests footpath robots could help reduce transport emissions. Delivery by self-driving robot might not be greener than walking to the post office, or delivery by a postie on a bicycle, or an e-bike. But modelling by the University of Michigan and Ford Motor Company showed footpath robots offered the lowest emissions out of a range of home delivery options including drones, diesel and electric cars.
Automation key to growth
As Australia Post focuses on parcel delivery over letters, the government corporation is increasingly in competition with multinational logistics companies and smaller courier companies, the discussion paper says.
Amazon Logistics is one to watch.
The company known for its extensive automation in its warehouses, has already positioned itself as the significant player in parcel shipping across many key markets, and has gained the fourth highest market share in shipping in Australia, according to Nurmohamed from Pitney Bowes data.
The online retailer and technology company has massively scaled its global logistics operations in recent years, spending an estimated $150 billion in 2021 on its network of fulfilment and sort centres, delivery drivers and aircraft fleet.
Amazon Logistics is the second largest carrier in the United Kingdom (17% share) and India (11% share); and third largest in the United States (22% share) and Italy (15%), according to Pitney Bowes most recent shipping index. In Australia, the company is fourth largest provider in terms of market share, Nurmohamed says.
Amazon’s increasing share of the logistics and shipping market allows it to reduce reliance on traditional postal carriers for its own deliveries.
Automation is already a key priority for Australia Post, particularly its use in parcel processing.
An Australia Post spokesperson says the organisation has invested $655.2 million in parcel facilities, fleet and technology since mid 2021. This includes eight new parcel processing facilities – all featuring state-of-the-art automation – enabling a combined “parcel throughput of up to 1.3 million per day”.
“Automation can take many forms, from robotic equipment used for everything from reading addresses to sorting mail by type or size. We also use automated forklifts and dimensional scanning machines widely across our network,” the spokesperson says.
A recently opened parcel facility in Perth, called ‘Boorna Wangkiny Mia’, can process nearly 200,000 parcels a day during peak periods.
Pressure on post to modernise
Merkert believes there’s room for more automation and digitalisation in postal delivery, which he says will be required for Australia Post to stay relevant and competitive.
“If you look at how parcel deliveries work today, most of it through Australia Post is still through the traditional postie… my mail is delivered by a guy on a bike, on a pushbike or on a motorbike,” he says.