Australia Post plans to stamp digital path

TWELVE weeks after taking over the running of Australia Post, chief executive Ahmed Fahour has mapped out a plan that involves an assault on China and the internet.

Fahour, who briefed senior executives at Australia Post's Melbourne headquarters on his "Future Ready" strategy yesterday, said the possibility of the taxpayer-owned entity becoming a stock exchange-listed company had not figured in his thinking.

"The No. 1 objective is for us to be a sustainable business, which means very simply we have to earn a fair rate of return," he said.

"The work that has been done has been to optimise that objective, and has not even given any consideration to [a public sale] categorically. It has not even featured in 1 per cent of our thinking."

The dilemma facing Fahour when he started at Australia Post in February was not new: for the past decade the amount of mail has plateaued at about 4 billion articles a year, which effectively means it was in decline as the economy and population grew.

Although the internet and mobile phones are "culprits" for the mail downturn, online shopping has been a boon, providing an enormous lift in parcel deliveries. Fahour thinks that is an area with considerable growth possibilities, because official figures suggest only 3 per cent of retail sales are being generated online.

Fahour plans to re-engineer Australia Post, dividing it into four divisions: postal services, covering traditional letters and parcels operations; retail services, essentially its 4400 "stores"; express distribution to handle freight import and export for business; and a new e-Services operation. Fahour is taking charge of the latter until a chief executive is appointed.

He has charged his managers with spreading the word among employees that the culture is going to change more rapidly, with the emphasis shifting from being a postal service with add-on businesses to being a service provider that still delivers mail.

That is likely to mean staff will be moved from the "old", and loss-making, mail business to deal with its still-expanding parcels operations and the era of electronic transactions. Fahour says the aim of e-Services is to exploit the concept that "whatever we do physically, we can do digitally".

But he wants to do more things physically, too chiefly by expanding the logistics joint venture with China's equivalent, Sai Cheng, which organises warehousing and distribution of Chinese-made goods for Australian-based importers.

While Australia Post won't be cutting BHP Billiton and Rio out of the mineral shipping markets, Fahour sees an opportunity to take on arranging the supply chain for small and medium businesses from Chinese factory gate to Australian loading dock. He will have a knowledgeable and ready ally on the parcels and logistics front in his chairman, David Mortimer, who formerly ran TNT freight group, which challenged Australia Post on many fronts.

Overall, Fahour said his strategy expanded on the work done by his predecessor, Graeme John, in finding ways to exploit Australia Post's unique distribution network and brand, and ensure it remains relevant to future generations.

He hopes to consolidate its position in those things for which its mostly franchised stores are recognised such as passport applications and bill payments. A former banker, he would not be drawn on the idea of using Australia Post to create a banking operation.