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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

Over the past few months, Australians ordering goods online have been waiting longer than ever for their packages to arrive.

In Victoria, parcels sent through Australia Post from interstate are taking up to 14 business days.

So what is going wrong at Australia Post?

Today, journalist and contributor to the Saturday Paper Hannah Ryan, on what these delays tell us about the vulnerability in Australia Posts’ business model.

It’s Wednesday November 10.

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RUBY:

Hannah, across the country right now, people seem to be having a lot of problems getting their parcels delivered by Australia Post. Delays, missing packages, the works. Is that your experience? What are you hearing?

HANNAH:

Well, I am one of the lucky ones. I'm actually quite a keen online shopper. And here in Sydney, as soon as we went into lockdown, I got online and bought a heap of stuff, and that all came pretty promptly. And then I decided it was time to rein it in. But my partner has never bought anything online before, and he decided to take the plunge about a month ago. He very bravely went on the Uniqlo website and ordered some socks and shorts. And I think it took three weeks in the end for them to come, which was a pretty, unsatisfactory debut for him. But if you look online, that's actually quite a good experience comparatively to a lot of what is going on for people waiting on parcels right now.

Archival tape -- News report:

“Get in early. That's the advice from Australia Post ahead of Christmas surges in online shopping. A lockdown backlog..”

HANNAH:

So if you look at Twitter and you look at the Australia Post handle, you'll just see customer after customer going, Where is my parcel? It has been in a storage facility for the last three weeks. Why can't you move it? And people are really, I think, frustrated and at boiling point with that.

Archival tape -- News report:

“Still, there's a backlog online shopping higher than ever, an international shipping crisis and strike action also playing a part.”

HANNAH:

And if you look on the Australia Post website, they provide an estimate of how long things are taking at the moment. The last time I checked, if you're in Victoria and you're waiting on an interstate parcel, it could take up to 14 business days to come. And if you're in New South Wales, it could take up to 11 days.

Archival tape -- News report:

“The service is already swamped, millions of parcels arriving and departing each month.”

HANNAH:

And it's not just the hobbyist online shopping people like me and my partner who are annoyed. It's also people who really depend on this for their business. So the retailers, the people selling things, the small businesses who are copping a lot of the blowback from customers who are going with the product that I bought...

Archival tape -- News report:

“Online shopping levels are already on par with last Christmas and with the busiest months still ahead, the advice is buy now or risk missing out.”

HANNAH:

So all of this got me wondering what is going on and why is this happening? So I did what journalists do and picked up the phone, made a few phone calls to figure out what's going on.

RUBY:

OK? And so what did you uncover, Hannah? What is it about this last few months in particular that has caused the Postal Service to become so strained?

HANNAH:

Well, I discovered that in some ways, what we're dealing with now actually goes back to a pivot in the business model that started years ago. So with Australia Post, it does primarily letters and parcels, and it's that letters business which has been suffering. So no one really sends letters anymore. Those numbers have been going down and down.

So the company's been for the last few years, way more excited about the parcels business. Online retail has been booming. It's more financially successful. So they really moved to focus more on parcel deliveries. Doubling down on that, they reallocated posties of people delivering letters to parcel vans to emphasise that business. And that seemed to have worked.

So this year, when Australia Post announced its latest financial results, things were looking pretty good. Their revenue was up by over 10 percent to a record $8.27 billion, and that included more than $100 million in profits.
But the very day after they announced those results, they gave a clue that there was a kind of a perfect storm brewing over their business.

Archival tape -- News report:

“Retailers in New South Wales, Victoria and the Act won't be able to ship goods this weekend as Australia Post attempts to clear some of the backlog of its Covid deliveries.”

HANNAH:

So Australia Post wrote to customers to let them know that it would be stopping parcel pick up for three days in New South Wales, the Australian Capital Territory and Victoria.

Archival tape -- News report:

“The suspension will start at seven a.m. on Saturday and will end on Tuesday.”

HANNAH:

And that was because they needed to clear a mounting backlog and the system was overwhelmed.
So really, they were victims of their own success here. The same thing that caused the revenue to really skyrocket, which was the amazing growth in online shopping and e-commerce, had also combined with lockdowns to bring that parcel delivery service to its knees.

RUBY:

Hmm. Okay. So it's essentially about demand than people in lockdown ordering things online and the sheer volume of people doing that has overwhelmed the postal system, even though it did try to anticipate that this was the way of the future. But Hannah lockdowns and online shopping have been the norm for a while now. So what's different about this last few months compared to last year?

HANNAH:

Sure, and when I first started reporting this story, I was a bit confused because I had heard that online shopping numbers had risen at the start of the pandemic, and now we're eighteen months in. So why has this caught them by surprise? But when you look at the numbers, it really is quite extraordinary.

2020 was a big boom, but 2021 has left it in the dust. And I think the reason for that is because the extent of the lockdowns that we've had this year have been much more kind of widespread than they were in 2020. So you had millions and millions of people in lockdown all at once and for a really long time.

So Australia Post reckons that just under six million households bought something online in September and 9.2 million households had bought something online in the past year, and they're regularly delivering over 10 million packages a week.

But this is critical at the same time as you had these massively increasing volumes. You also had the workforce of Australia Post impacted by COVID 19 in a much more dramatic way. So workers started getting sick and having to isolate.

RUBY:

OK, so essentially, as Australia Post was dealing with more parcels, more orders than they had ever seen before, staff became less able to deal with them, which compounded the problem.

HANNAH:

That's exactly right. So Delta hit New South Wales and Victoria really hard and hit lots of frontline industries and workers. And that included Australia Post.

And it highlighted another vulnerability with their business model.

RUBY:

We'll be back after this.

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RUBY:

Hannah, what is it about Australia Post's workforce that made them particularly vulnerable to COVID 19 outbreaks?

HANNAH:

So we know by now that COVID 19 doesn't affect people equally, that there are certain kinds of people and certain kinds of workers who are much more likely to be affected. So if you work a white collar job and you work from home, you don't see that many people, you're much less likely to get the virus than if you're in a blue collar industry, especially if you're in an industry that relies on precariously employed workers.

Australia Post has also historically relied a lot on contractors, which has been really controversial and something that's been of heightened critique during the pandemic because of the precarity of that kind of work.

Those people were much more vulnerable to COVID. They were more likely to pick it up in distribution centres and warehouses. There were also more likely to live with other frontline workers.

So at any given time during these lockdowns and in Victoria and New South Wales, Australia Post says that up to 800 workers were isolating after being exposed to Covid, which meant that they couldn't go to work processing parcels in storage facilities or delivering them to houses.

So they've had the workforce going seven days a week. Now workers are doing overtime to get it all done. You've also got workers in Australia Post contact centre, which takes calls from customers which are now very angry phone calls. They've reported a much higher volume of customer abuse and threats, and they say that they don't have enough staff to cope with the volume and in fact, they think that worker numbers are going down.

RUBY:

Right. OK, so even though Australia Post is getting these record financial results and more business than ever before, its workers have been at high risk of getting sick, and also being abused by customers?

HANNAH:

That's right. And then at the same time is that you've had the executives being rewarded with big bonuses. So after bonuses were frozen in the last financial year, we've now seen the most recent annual report be tabled in Parliament recently...

Archival tape -- Senate Estimates:

“August and September were some of the biggest months in our 211 year history.”

HANNAH:

...and that reveals that the top seven executives at Australia Post shared in bonus payments totalling 4.85 million dollars and in some cases, that nearly doubled their salaries.

Archival tape -- Senate Estimates:

“Star Track workers employed under your national enterprise agreement have not received a pay increase since December 2019, whilst you’re on 1.5 million?

Archival tape -- Senate Estimates:

"Does your bonus increase the more you hold wages back?"

Archival tape -- Senate Estimates:

"No it doesn’t senator.”

HANNAH:

And there's a lot of people out there, both Australia Post staff and customers. Their dominant experience of that company in the last few months has been really one of frustration, and I'm sure that those bonuses may rub people up the wrong way.

RUBY:

Hmm. OK. And so what is Australia Post saying about all of this? Is it acknowledging these problems, the frustrations of its workers?

HANNAH:

Essentially, what Australia Post is saying is that this was unpredictable, that they're in uncharted territory.
So I spoke to Gary Star. He's one of those executives. He's the executive general manager of business, government and international. And his point of view is basically that they could not have seen this coming the way that the length and extent of the lockdowns combined with the impact on staffing. So he said that the company does have a lot of experience in dealing with emergencies, things like bushfires and the aftermath of natural disasters, but this was just impossible to see it play out.

And Australia Post has been saying that despite the critiques, that it's been too reliant on contractors in the past, that it's actually taken on way more full time and permanent staff during this crisis to help them sort it out.

But I think that the real test of all of this is probably yet to come. This could just be a blip that people forget and forgive. But if they fail this test, then it could be a really lasting problem for their reputation. And that is this coming Christmas.

RUBY:

Mm and that's obviously because Christmas is the busiest time of year traditionally for people to send parcels, and I suppose this Christmas will be no exception. So is Australia Post preparing for that? Do you think that they will cope?

HANNAH:

So they say they will cope. They think that things are getting better. So when people come out of lockdown, you do see a slight moderation in the numbers of people doing online shopping. So we've seen that in Sydney. And we're seeing it in Melbourne now when you can go back to a physical shop, some people do prefer to do that. But Christmas is obviously a thing of its own and they do expect numbers to go even higher.

They're also hiring four thousand Christmas casuals to help with the demand. A bunch of whom have already come on board and started to work. And they're going to keep doing weekend deliveries throughout the year.
So hopefully we will get through it and they will get through it. But those bigger problems about the nature of the workforce and their vulnerability remain.

So I think one of the big questions is going to be once they come out of this panicked period, this kind of crisis period. Are they going to change anything more fundamental? Are they going to stop and reflect? Because the shockwaves from this pandemic throughout the world are going to keep coming.

RUBY:

Mm. Hannah, thank you so much for your time.

HANNAH:

Thank you.

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RUBY:

Also in the news today…

A man in his 40s was shot dead by police in a home in Sydney's north-west on Tuesday, following what's been described as a “physical confrontation”.

In a statement, a NSW police spokesperson said officers went to the home to “conduct inquiries in relation to an outstanding warrant.”

An investigation into the shooting is underway.

And Prime Minister Scott Morrison has released the government's “Future Fuels Strategy” saying he will not do anything to force Australians into using electric vehicles.

The strategy does not include subsidies or tax incentives to increase the uptake in electric vehicles.

Instead, the federal government says it will partner with the private sector to fund 50,000 charging stations in Australian homes.

I’m Ruby Jones, this is 7am. See ya tomorrow.