Australia Post chief Ahmed Fahour will need to watch out.
Today all attention is on his efforts to fix the postal system but the real game of the future is online parcel delivery. Fahour and his predecessor Graeme John caught their rivals asleep and Australia Post has taken a remarkable 80 per cent of the growth business -- a very rare occasion where government executives outsmarted their private sector counterparts.
But in the private sector, Toll and other rivals are coming back at Fahour and Australia Post with a vengeance -- at a time when he is distracted (Heart and parcel: Toll's play to topple the Post, August 23).
This week Australia Post announced 900 job cuts, mainly in administration, totalling 23 per cent of head office staff. Fahour’s plan to separate the parcels and logistics business, or ‘Blue Post’, from the loss-making letter business and retail, or ‘Red Post’, is a shrewd move but the job losses have distracted from the bigger picture. Meanwhile Fahour has attracted even more unwanted attention over his $4.8 million salary.
But I am sure Ahmed Fahour will be keeping an eye on what is happening outside his business too. Australia Post’s parcel cash flow is being eaten up in post losses at a time when massive investment is taking place to challenge him.
To underline that challenge, Toll chief executive Brian Kruger yesterday announced that works have started on the 71,000 square metre facility on 20 hectares next to Melbourne Airport to triple Toll’s parcel sorting capacity in Melbourne to an “unprecedented” 35,000 parcels per hour.
Toll’s previous chief executive Paul Little fashioned the business around corporate and government distribution and warehousing, but like his main rival Lindsay Fox decided not to pursue the growth market in household delivery.
Now under Kruger’s leadership Toll has forged agreements with newsagents that aren't post offices to build the Toll delivery network.
The massive new parcel facility at Melbourne Airport shows just how seriously Kruger is taking the challenge, and there will be a lot more to come. Fahour must invest to match and surpass Kruger if Australia Post is to retain market leadership.
Fahour clearly understands the challenge.