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Australia Post CEO Paul Graham highlights weakness in parcel volumes as rising interest rates impact

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2023-06-28

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Australia Post CEO Paul Graham has observed a weakening trend in parcel delivery volumes as consumers tighten their belts in response to rising interest rates and cost of living pressures. Graham noted that shoppers are seeking to stretch their dollars further by looking for discounts and trading down when shopping online. While he remains optimistic about the long-term prospects of e-commerce, Graham acknowledged that the mortgage belt, particularly affected by higher interest rates, is exhibiting caution in their online purchasing behaviour.

Australia Post, the country's largest parcel and package handler, has experienced significant growth in volumes due to the surge in online shopping. However, recent cracks in parcel traffic indicate a potential downturn, aligning with warnings from national retailers about declining in-store and online sales. Graham mentioned detecting a softening of parcel volumes a few months ago, although overall volumes remain relatively stable across diverse customer segments.

The trend of consumers opting for cheaper or value-oriented offers has also been observed by Australia Post, mirroring similar shifts noted by supermarkets, fashion retailers, and department stores. Graham attributed this change in shopper behaviour to the recent interest rate hikes, with consumers still spending online but actively seeking discounts and bargain deals.

While interest rate increases are expected to prompt families, particularly in the mortgage belt, to review their discretionary spending habits, Graham emphasised that internet shopping is a permanent fixture. Recognizing the significance of western Sydney as a high-growth corridor and a thriving economic hotspot, Australia Post inaugurated its new parcel facility in Kemps Creek. Covering 33,680 square metres and serving as the second-largest sorting facility in the Australia Post network, the facility is designed for future expansion and has a current capacity of handling 200,000 parcels per day, with potential for doubling that throughput.

Graham highlighted the sustained online penetration in western Sydney, with around 30,000 parcels being delivered daily to the region. The facility's launch was attended by Communications Minister Michelle Rowland, local member and Minister for Climate Change and Energy Chris Bowen, and CEO Paul Graham. Positioned just 15 kilometres from the planned western Sydney airport, the facility integrates parcel processing, pick-up and delivery, as well as transport and linehaul operations, reflecting Australia Post's commitment to adapting to evolving customer needs in rapidly growing communities.

As Australia Post invests in infrastructure and technology to support the changing demands of its customers and communities, CEO Paul Graham remains confident about the future of internet shopping, despite the potential softening effects of rising interest rates on consumer spending habits.

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