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Australia Post joint venture with Aramex

Blog

Australia Post joint venture with Aramex

Ian Kerr

More and more posts and global parcel carriers are expanding onto Australia Post’s home turf. Australia Post’s recently announced strategic partnership with Dubai-based logistics company Aramex is a signal that it won’t just sit back and let competitors pick off its growing e-commerce parcels business.

In early June, Australia Post and Aramex announced their intention to enter into a joint venture targeting the global e-commerce market, with a particular focus on Asia.

The joint venture will build on the combined Aramex and StarTrack International global express delivery networks. Under the deal, which should be completed later this year, Aramex will invest in StarTrack International and contribute marketing and sales capability.

According to Australia Post, the alliance will open emerging world markets to Australian businesses and online shoppers.

The arrangement should help Australia Post capture more inbound e-commerce parcel volumes, as well as stimulate outbound international parcels growth. This could prove particularly attractive to smaller Australian e-commerce merchants, which typically deal with Australia Post as their shipping partner.

Australia Post will perform the last-mile delivery for inbound international parcels under this agreement. Australia Post has the country’s biggest delivery network, and is the leader in B2C parcel delivery.

International competitors

While there has always been competition in Australian domestic parcel deliveries, in recent years competition in cross-border parcels has been intensifying.

Many of Australia Post’s competitors in domestic and international parcel delivery have already formed global delivery partnerships. The joint venture with Aramex seems to be part of a strategy to defend and grow Australia Post’s position as the leader in Australian domestic and cross-border parcel delivery.

Japan Post has bought Toll, while FedEx recently completed its acquisition of TNT Express. Singapore Post has acquired Couriers Please and has since taken a share in HUBBED, which delivers parcels via newsagencies.

In May DHL opened a new, expanded international express facility in Canberra, timed to coincide with the expansion of Canberra Airport to include international flights from September. DHL is pitching to Australian e-commerce merchants selling into international markets.

Australian domestic courier market

The Aramex/Australia Post joint venture also has ramifications for the domestic courier market.

Mail Call, the Australian courier company acquired by Aramex in 2014, will change hands again under the deal, becoming part of Australia Post's StarTrack Courier business. At the time of the acquisition, Aramex said it was buying Mail Call for its intellectual property, in particular its timed delivery service.

Aramex, the largest parcel operator in the Middle East, has been on the acquisition trail in recent years, buying local carriers in Australia and various emerging markets.

At the beginning of this year, Aramex acquired Fastway Couriers. Fastway operates in a number of countries. It covers 85% of the Australian population, and competes with Australia Post’s domestic express business.

Fastway, which has 800 franchisees in Australia, currently has a partnership with big box stationery retailer Officeworks to provide delivery for its “Mailman” parcel delivery service. Mailman competes on price and, it claims, convenience by virtue of Officeworks’ extended opening hours. How will Australia Post’s relationship with Fastway’s parent company affect the Mailman partnership?

Sai Cheng Logistics

The Aramex deal is not Australia Post’s first international partnership. Sai Cheng Logistics, Australia Post’s joint venture with China Post, is now over ten years old, and comprises warehouses in six Chinese cities. It has offices in Beijing and Guangzhou, and provides inbound and outbound supply chain solutions for merchants accessing the Chinese market.

With Sai Cheng Logistics, Australian companies importing goods from China can have them delivered straight to Australian addresses without having to go through the normal importing and distribution supply chains.