Logistics Industries ENVIRONMENTAL SCAN · Logistics Industries Environmental Scan 2014 Page 2 communication media than it is for businesses and government that have multifaceted

This document is an extract of the 2015 Environmental Scan prepared by the Logistics Training Council for the Western Australian Department of Training and Workforce Development. For more information please refer to the complete Environmental Scan.

Prepared by the Logistics Training Council for the

Western Australian Department of Training and Workforce Development

17 Lemnos Street, Shenton Park, WA, 6008 – Postal: PO Box 7033, Shenton Park, WA, 6008

Telephone: (08) 9388 8781 - Facsimile: (08) 9388 8784 – Web: logisticstc.au

Logistics Industries ENVIRONMENTAL SCAN

Update July 2015

Postal

Logistics Industries Environmental Scan 2014

This page is intentionally left blank

Postal

Logistics Industries Environmental Scan 2014

Table of Contents

Overview ............................................................................................................................... 1

Trends Analysis ..................................................................................................................... 1

Demographics ....................................................................................................................... 3

Size and Distribution .......................................................................................................... 3

Employment ...................................................................................................................... 3

Age Profile ......................................................................................................................... 8

Gender............................................................................................................................... 9

Qualifications and Training .................................................................................................... 9

Educational Attainment ...................................................................................................... 9

Government Policy .............................................................................................................. 10

Regulatory Requirements................................................................................................. 10

Globalisation ........................................................................................................................ 10

Technological ...................................................................................................................... 11

Sustainability ....................................................................................................................... 11

Economic Drivers ................................................................................................................. 12

Regional Activity .................................................................................................................. 12

Critical Skills Shortage Occupations ..................................................................................... 13

Postal

Logistics Industries Environmental Scan 2014 Page 1

Overview

Australia Post is the major organisation in the Australian postal industry. Within the private sector, the Major Mail Users of Australia is the peak industry body and represents major mail generators and mailing houses in Australia.1

Australia Post is one of Australia’s largest employers and has operations encompassing road, rail, air and sea. Other companies involved in this sector, otherwise referred to as express courier services include companies such as DHL, Toll IPEC and UPS.2

Although digital substitution has continued to cause a steady decline in general mail, postal/courier companies continue to make profits.3 This can be attributed to the level of restructuring that companies have undertaken in an effort to remain responsive to consumer preferences. Whilst some look at alternative ways of re-engaging with their client base, others continue to strengthen ties in the niche market areas in which they operate. It should also be noted that not all operators in this space prefer to be identified as postal companies.

As a result of the structural adjustments other elements within the postal sector are evolving. The range of services offered has been expanded and processes such as recruitment are no longer conforming to traditional methods. Contrary to the notion that this is a dying sector, recent market conditions have indicated that the opposite is true. As well as continued involvement in domestic and international letter delivery and on-time international, domestic and express parcel delivery services, Australia Post offers financial, government and identity services; data and customer acquisition services; document management and processing; cross-town courier services and a secure business-to-business and business-to-customer payment gateway.4

The development of the digital economy has stimulated the need for post offices to add to their product and service offerings by developing postal digital services. However, the pace, scope and degree of success differ amongst countries, regions and within markets. Until recently a comprehensive and accurate body of information on the types of services offered, and their impact on company fortunes, was missing. Fortunately this situation is changing and we are now beginning to understand and appreciate the development of digital postal business, its value and the possible future trends.

Trends Analysis

With Australia Post’s strong dominance in this sector, some industry stakeholders have aligned themselves more with couriers and freight forwarding rather than being associated with post.5 The drop off system used by postal delivery officers does not require a signature, unlike the deliveries made by couriers. Although Australia Post has been privatised, it is still often perceived as government owned and run. The privately owned companies have high regard for being independently owned hence the strong push to differentiate between the two.

The long term decline in traditional mail delivery has been attributed to advances in communication technology, ie social media and mobile devices. Despite these services providing a cheaper and quicker alternative, slight growth is still envisaged for the sector, mainly in the area of parcel delivery. As this impacts the courier pick-up and delivery services where there is strong competition, growth is forecasted at a compound rate of 0.7% in the next four years.6 It should be noted that it is significantly easier for individuals to switch

Postal


communication media than it is for businesses and government that have multifaceted communication needs and thus would take some time to adjust.7

In a bid to adapt to changing customer preferences, service providers such as Australia Post are diversifying their product offerings as a means of spreading their risk. Foreign currency exchange, prepaid visa cards for online purchasing and insurance are being used to tap into the 15-24 youth segment.8

There is a growing emphasis amongst postal corporations to focus on value and not volume which will result in conventional roles within the postal sector are set to changing somewhat.Through industry consultation with employers in this sector, it has been noted that job roles in some cases have changed to match the new organisational structures. Traditional roles such as sorting clerks and mail distribution coordinators are no longer used. Most employers now prefer to cross-train employees under the banner ‘postal worker.’ This enables them to be multi-skilled, job share and work more effectively as a team whilst reducing boredom in the workplace.9

There is also an emerging trend whereby company recruiting patterns have evolved over time. Firms source employees from other States, and in some cases international branches, to fill vacant positions. This assists with maintaining company ethos and creates more opportunities for career progression.10

As a result of more goods being purchased online and the need to have items delivered either to households or businesses, there is a direct correlation between online sales and the demand for postal/courier services. Total online retail spending as of April 2015 was $16.9 billion. According to the NAB online sales index, this was an increase of 9.6% on figures obtained from 2014.11 Contrary to popular belief, domestic retailers still retain the largest share of online sales within Australia (approximately 75%).

A new service offering was introduced in April 2015 to cater for parcel delivery market within Australia. ‘Mailman’ is the name given to the premier courier service provided by Fastway courier franchisees in partnership with Officeworks. This innovative concept has the flexibility to provide a drop-off service outside of normal business hours and on weekends. Customers are able to send parcels utilising the extended trading hours at Officeworks.12

Graph 1 - Products and services segmentation (2013-2014)

Postal


A large amount of capital is being re-invested into improving systems and processes to assist organisations such as Australia Post transition into more flexible and accessible business entities. An estimated $2 billion dollars will be spent on improving logistics networks and rolling out of technology to cater for self-service stations for 24 hour access to selected facilities.13

Demographics

Size and Distribution

In a little over a decade the number of mail sorters employed in the country has fallen from 15,500 in 2013 to 14,200 in 4014.14 Approximately 9.3% per cent of postal and courier pick-up and delivery service workers were employed in WA.

National figures indicate that Couriers and Postal Deliverers have an above average proportion of full-time jobs (78.6 per cent). For Couriers and Postal Deliverers working full-time, average weekly hours are 41.0 (compared to 41.1 for all occupations) and earnings are average - in the fifth decile. Unemployment for Couriers and Postal Deliverers is average.15

Nationally, the median age for postal, courier, pick-up and delivery service workers is 45 years.

The industry appears to have better rapport with mature workers, particularly those between the ages of 30 and 54.

As seen in the following graph, consumers are the industry’s largest source of revenue. They have boosted activity through the demand from online purchases which require parcel delivery. To a lesser extent, other businesses such as professional and technical services also require this facility for the delivery of urgent documents to offices located interstate.16

Graph 2 - Major market segmentation (2012-13)

Employment

Postal


The graph below shows the number of postal workers by quarter between 1992 and 2014. Since approximately 2010 the number of full time workers has been declining with a more noticeable decrease for male workers. Whilst the number of female part time workers has remained relatively constant, the numbers of their male counterparts have been increasing.

Graph – Number of Postal workers, full and part time, by sex

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Tho

usa

nd

s

Part Time Males Part Time Females Full Time Females Full Time Males

Source : ABS 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, May 2015

Postal


Graph – Employment growth in select Postal occupations, 1991-2015 by quarter

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1991 1993 1996 1999 2002 2005 2008 2011 2014

Tho

usa

nd

s

Mail Sorters


The following graph indicates the percentage of full and part-time workers in this sector. As can be seen, the majority of the workforce is employed on a full-time basis. It should be noted that according to the WA census statistics, the Postal Sector has the highest proportion of part-time workers of all transport and logistics industries (as shown in the following graph). Most companies are able to offer school friendly working hours and due to the nature of the work, shift work is often available.

Postal


Graph Percentage of full-time and part-time workforce - Postal Sector

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1993 1996 1999 2002 2005 2008 2011 2014

Full Time Part TimeSource: ABS Cat 6291.0.55.003

Figures in the ABS Labour force survey indicate that 87% of couriers and postal deliverers are employed in transport, logistics and warehousing. In 2014 there were approximately 47 900 couriers and postal deliverers employed in Australia with WA accounting for a 9% share of this figure.17

There are over 14 000 mail sorters employed in Australia. An estimated 14% are from Western Australia.18 Over the past five years, changes in customer demands and preferences have brought about a decline in the number of people employed in this occupation. There are many job roles that have been redesigned and channelled to cater for the growing parcel delivery segment of postal companies. Transport, postal and warehousing remains the dominant employing industry for this cohort of workers.

The following graph below shows quaterly figures obtained form the ABS on the composition of the postal workforce. The growing WA population saw the percentage of employees rise to over 85% in 2007 but the onset of the GFC brought about a reduction. As this occurred, the number of self employed contractors began to rise. This also coencided with company restructuring and a bergioning parcel delivery market.

Postal


Graph - Composition of Postal workforce

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

% o

f To

tal

Employee Employer Self-Employed


As less people send traditional mail and opt for alternative means, steps have been taken by postal sector’s biggest employer to shed staff and adapt to changing consumer tastes and preferences.19 900 jobs are expected to be shed over the next year. Further changes could take place as Australia Post considers reducing the number of days regular mail is delivered due to the decline in volume.

The following graph depicts online job advertisements for a selected group of road transport occupations in WA. Job listings were mainly taken from seek.com.au, however other job boards and company websites were used.

Postal


Graph 3- Job vacancies in Postal per month (January 2014 – June 2015)

0

5

10

15

20

25

24

-Jan

21

-Feb

21

-Mar

18

-Ap

r

16

-May

13

-Ju

n

11

-Ju

l

08

-Au

g

05

-Sep

03

-Oct

31

-Oct

28

-No

v

26

-Dec

23

-Jan

20

-Feb

20

-Mar

17

-Ap

r

15

-May

12

-Ju

n

10

-Ju

l

2014 2015

Nu

mb

er

of

Vac

anci

es

Courier Postal Delivery Officer

Sorting Clerk Distribution Co-Ordinator

Source: seek.com

As can be seen, courier drivers are the most sought after postal occupation from the online job survey conducted by the LTC. Post Christmas online purchases would explain the high demand for courier drivers from January through to March. Apart from the period leading up to Christmas where demand for casual labour rises, there has generally been a levelling out in job vacancies. Due to structural and operational changes, not as many people are required to carry out traditional roles.

There is a large proportion of migrant workers in the Postal Sector as there are few limitations to entry level work. A sizable amount of training is conducted in-house and is specifically tailored to the tasks at hand.

Age Profile

Western Australian figures indicate that average age for the postal workers is 43.7.20 This figure is lower when compared to national average of 47 years of age.

Graph 4 – Percentage of workforce in each age group over five years – postal and courier pick up and delivery services

Postal


It should be noted that the figures depicted in the graph above are for Mail sorters, otherwise refered to as Mail Clerks and Postal sorting officers.

Gender

The 2011 Australian Census figures show that in Western Australia about 41% of postal workers are female. This is currently the largest percentage shares of female workers in all of transport and logistics. This industry is flexible and is capable of providing family friendly shift work. It has been noted that there is a positive correlation between the high proportion of female workers and part time workers in the Postal sector. In some instances, the roles are not as physically demanding as those experienced in areas such as road transport and warehousing.

According to the 2011 census, there were a high percentage of women in managerial positions. This figure dispels the notion of female job roles mostly being found in administration. Since women spend more time in their chosen career and have not left the workforce, their chances of being promoted have greatly been improved.

Qualifications and Training

Many of the qualifications in this sector are aligned to warehousing and road transport, as the activities involved deal with handling of letters and parcels. However there appears to be a shift in the classification of job roles which would in turn affect the type and delivery of training. The traditional job titles such as sorting clerks and distribution coordinators are quickly becoming a rarity. This is attributed to an evolving ethos in how employees are trained. Instead of training a worker for one specific task, the worker is trained across a range of tasks within the operating cycle of a business. This creates a lot more flexibility in the way staff can be more effectively utilised, with the added benefit of less boredom due to a wider variety of duties to be carried out.

As the training is mostly catered to customise organisational equipment and systems, in-house training is preferred. There is little interest placed on outsourcing training for nationally recognised qualifications apart from a few warehousing units, some relating to occupational health and safety as well as qualified forklift operators.

Educational Attainment

Postal


Graph 5 - Qualifications profile, Postal, Courier Pick-up and Delivery Services

Government Policy

Regulatory Requirements

The Department of Broadband, Communications and the Digital Economy provides advice to the Australian Government on postal policy and legislation and on issues affecting the postal industry. This includes setting the broad strategic policy framework and goals for Australia Post and consultations with industry, consumer groups and other government agencies and stakeholders.21

Generally, all goods imported into Australia are subject to customs duty and GST and are assessed for community protection risks. They are also subject to the Australian Quarantine and Inspection Services (AQIS).22

The Postal Industry Ombudsman (PIO) investigates complaints about the provision of a postal or similar service. The PIO is a function of the Commonwealth Ombudsman and is independent of both complainant and postal agency.23

Due to the close proximity to airports in which some companies operate, there is a high level of mandatory security checks which need to be undertaken by employees. In other cases, the handling of dangerous goods requires a certificate and needs to be renewed every two years.24

As companies deal with both small and large parcels, it is imperative that workers are familiar with the occupational health and safety regulations as this impacts on how they handle materials without injuring themselves in the process. Like many businesses in warehousing and logistics, the postal sector uses vehicles that require a licence to operate.

Globalisation

The short-term future of parcels and logistics around the world depends on the health of the economy, as consumer spending directly affects demand for the movement of goods. After rapid growth in recent years Australia Post’s parcels and logistics portfolio has continued to consolidate its position in readiness for an upturn.25

The growth of e-Commerce and the associated delivery of goods has sparked a considerable amount of interest among postal and courier organisations. The future of bricks

Postal


and mortar retailing has been brought into question as the lure of cost savings draws more people toward online trading. A number of preliminary reports (Green Papers) in Europe have been drafted to stimulate discussions on how best companies can approach changes in business culture interaction with customers. Sustainability and the environmental impacts of delivery are also gaining higher levels of priority in business activities. 26

Asutralia Post experienced negetive growth of -4% in mail volume and like many other postal firms, profitability form mail is declining hence the push to diversify operations and boost non mail earnings.27

Technological

Australia Post has upgraded its major Information Technology platforms from Human Resource systems to mail production and article-tracking systems. It has also introduced new mail processing equipment and improvements to its transport fleet, as well as upgrading its point-of-sale system and online services.

Other systems used by industry include mobile data terminals (MDTs) to collect and transmit data directly from the point of pick up or delivery; electronic despatch systems which produce compliant bar-coded labels; and automated sort systems.28 E-con notes enable customers to create and email consignment notes to their sender.

The introduction of new scanning equipment has numerous long term benefits; however the challenge faced by industry is the timing and rollout of this very useful technology.29 It is important that there is minimal impact on operational functions of the business as a result of the upgrades. The cost of the expensive equipment tends to leave the smaller operators vulnerable as they do not have access to the shareholder funds of the larger companies.

Australia Post now uses no sorting equipment that is older than 10 years. The mechanisation that has taken place has resulted in a massive restructure of the organisation in terms of the number of team members and job roles.

Vast amounts of progress have been made regarding track and trace technology currently used by industry players. Not only do they offer a one-stop shopping experience for customers but 24 hour access to tracking the location of a parcel that has been sent has become more commonplace. Some companies have made significant digital imprints with the unveiling of applications for handheld devices which heighten the’ convenience’ factor for customers.30

Scanners being used for parcels, which also have GPS and better capabilities, eg software can be upgraded as required, and eliminate the need for radios in delivery vans.

Sustainability

The postal industry is committed to conserving resources, reducing waste and minimising the environmental impact of its business. Initiatives include degradable satchels, carbon emissions programs, projects to reduce waste and increase recycling, and reduction of energy consumption. Australia Post has achieved a significant reduction in greenhouse gas emissions to a level on par with those produced in 2000. It is also on track to meet its board-endorsed carbon reduction target of 25% by 2020.

Postal


Australia Post has a fleet of over 10,000 vehicles including motorcycles, cars, vans, small and large trucks and prime movers and generates approximately 28% of Australia Post's greenhouse gas emissions. It has committed to reducing its fuel consumption through a number of initiatives including the introduction of hybrid trucks and upgrading the fleet with more emission-efficient vehicles.31

In addition to this further steps have been taken by the company to ensure that practices conform to its green policy. There has been a module especially designed for the drivers of the Australia Post fleet, which basically details how drivers are to reduce carbon emissions by the manner in which they operate their vehicles. Furthermore, details have emerged of how Australia Post is purchasing electric cycles to replace the existing ones. It is still at trial run stage but would inevitably save on fuel bills.

There are a number of ways in which companies are looking to reduce their carbon footprint. The postal sector has overlapping synergies with road transport and aviation; hence a considerable amount of expenditure is allocated to the aspects of the business that are regarded to be part of the bigger contributors to carbon emissions.

The Environmental Measurement and Monitoring System (EMMS) was an initiative set by the CEOs operating within the Postal Sector. The system was built with the aim of implementing a common carbon measurement and reporting framework in line with customer requirements and stakeholder expectations. As an EMMS participant, Australia Post has agreed to participate in a group target of a 20% reduction in carbon emissions by 2020. The scope of areas include: greenhouse gas emissions from buildings, transport and indirect transport-related activities of the reporting entity.32

Economic Drivers

The demand for services depends on the level activity in the economy, ie business-to-business correspondence. The escalation of business-to-consumer sales using parcel delivery is expected to continue beyond 2013.

The real household disposable income has flow-on effects on the Postal Sector. The more income there is available to spend, the more likely consumers are going to spend on goods such as internet and catalogue shopping which require parcel delivery services. During periods of low consumer confidence both, businesses and consumers are reluctant to make purchases. This was evident between 2008 and 2009 where world markets were stricken by high levels uncertainty (the Global Financial Crisis).33

Regional Activity

Australia Post has seized the opportunity to source alternative revenue streams. It has expanded its number of services to include banking services to regional customers due to a new partnership with the Rural Bank. The 130 remote outlets will service regional organisations such as agribusiness offering greater flexibility through the extensive network Australia Post has established across the country.34

As Western Australia is vast in size, it has been noted that there are a number of regional depots for postal companies where a particular company dominates the area. It would not be economically viable for a company to duplicate the infrastructure of another company in an

Postal


effort to service a small population. As a result, companies tend to outsource or onsell courier services to a company with existing well established links in that particular area.

There has been a shift in the type of activity occurring in the delivery of services in regional centres where more on-line purchasing of goods is occurring, requiring more deliveries direct to homes. This trend was first identified in Kalgoorlie through the regional Chamber of Commerce.

Occupations in Demand

Courier Driver

Reference - Endnotes

1 Australian Government website http://australia.gov.au/topics/it-and-communications/postal-services

2 Courier Pick-up and Delivery Services Industry Report, IBIS World, 2013

3 Australia Post Annual Report 2011-12

4 Australia Post website – www.australiapost.com.au

5 Industry stakeholder consultation

6 IBIS World, Postal and Courier Services in Australia Industry Report, July 2013

7 IBIS World, Postal and Courier Services in Australia Industry Report, July 2013

8 Australian teens keen to work and manage their money, Australia Post Media Release, February

2014 99

Industry stakeholder consultation 10


Online Retail Sales Index: In-depth report – April 2015 12

Media release www.fastway.com.au April 2015 13

The West Australian newspaper, 12 October 2012 14

Job Outlook website 2014 15


Courier Pick-up and Delivery Services Industry Report, IBIS World, 2013 17



http://www.abc.net.au/news/2014-06-10/australia-post-confirms-900-jobs-to-go-in-restructure/5511414 20

2011 Census of Population and Housing 21

Australian Government website http://australia.gov.au/topics/it-and-communications/postal-services 22

Australian Government website – Australian Customs and Border Protection Service 23

Australian Government website http://australia.gov.au/topics/it-and-communications/postal-services 24


Australia Post to deliver parcels on weekends as trading hours extended – www.news.com.au, May 12 2014 26

E-commerce and Delivery – AN IPC Strategic Perspective, February 2013 27

Achieving High Performance in the Postal Industry, Accenture, 2014 28

Toll IPEC website 29

The new look track and trace has arrived - http://www.aae.com.au/about/news/214/ 30

ParcelPoint harnesses power of Mule to the online delivery game - www.theaustralian.com.au October 2014 31

Australia Post Website 32

IPC Postal Sector Sustainability Report, 2012 33

Postal and Courier Services in Australia Industry Report, April 2012

http://www.fastway.com.au/

http://www.news.com.au/

http://www.aae.com.au/about/news/214/

http://www.theaustralian.com.au/

Postal


34Kudouh, F. ‘Australia post, rural bank to give bush new service’, West Australian 03/08/11

Documents

Logistics Industries ENVIRONMENTAL SCAN · Logistics Industries Environmental Scan 2014 Page 2 communication media than it is for businesses and government that have multifaceted