Australia Post and Qantas have extended their domestic and international air freight agreement. The seven-year agreement is valued at over $1 billion, and is on top of Australia Post’s multi-year $900m investment in its parcel network.
The boom in e-commerce parcels and the growing emphasis on speed is reflected in the announcement that Qantas will add three new freighters to its fleet.
Qantas has seven freighters, and three new Airbus A321 freighters are due to come into service in October 2020 thanks to this deal. The new freighter can carry 50 per cent more freight than the current Boeing 737 freighters. Qantas will be the first airline in the world to operate the A321 as a freighter aircraft.
In short: more speed, more capacity.
“Last year we flew more than 400 tonnes of mail on our busiest night, and more than 40 million parcels during December; this year, we expect to exceed both those targets.” - Australia Post CEO/MD Christine Holgate
Australia Post will have access to Qantas Freight’s dedicated freighter aircraft and priority access to the cargo space on up to 1,500 Qantas and Jetstar passenger flights to over 110 destinations each day, in addition to space on partner airlines globally.
“The e-commerce market could double in Australia over the next five years to $50 billion, from the current $25 billion. Online is 10 per cent of the market. We believe it will get to 20 per cent by 2025.” - Christine Holgate
About 25 to 30 per cent of Australia Post’s e-commerce parcels are carried by air. When you consider the vast distances between Australia’s major population centres, and the very low population density in between, it’s easy to understand why express parcels are carried by air. Some major domestic e-commerce retailers only operate one fulfilment centre for the whole country. Even Amazon only has two fulfilment centres.
This paucity of local FCs will change as companies such as Fulfilio (owned by Australia Post) start to gain traction.
Letters and parcels
Earlier this month Australia Post announced a planned 10% increase to letter prices, to take effect from the beginning of 2020.
Letter volumes are falling - and have fallen so much that last year posties were able to deliver 45% of all parcels. These parcels typically weigh under 2kg, and are carried by posties riding small motorbikes. A small but growing part of Australia Post’s delivery fleet consists of electric delivery trikes.
Interestingly enough, about 20 per cent of the volumes Qantas will carry under the deal will be letters.
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