Australia Post has positioned itself to take a bigger slice of the online retail sector through the purchase of Qantas' 50 per cent stake in StarTrack freight business.
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Australia Post said it would pay $408 million to Qantas for the 50 per cent of StarTrack it doesn't own.
"The growth in online shopping in Australia is increasing demand for flexible, timely and cost-effective delivery solutions for businesses and consumers," said Australia Post chief Ahmed Fahour.
As the largest delivery network in Australia, StarTrack will increase Australia Post's ability to serve retailers and customers who are increasingly shopping online — a market estimated, by National Australia Bank, to be worth $11.9 billion and to have grown 22 per cent in the year to August.
StarTrack will bring infrastructure capabilities that include a fully-automated network and track-and-trace technology. The freight company, with about 3700 employees, specialises in next-day, same-day and weekend delivery.
"Under single ownership, both Australia Post and StarTrack will have a far more comprehensive offer to customers and the potential to unlock further value for our customers in the future," said Mr Fahour.
Ord Minnett senior equities research analyst Paresh Patel said Australia Post’s decision to take 100 per cent ownership of StarTrack was a ‘‘smart move’’ because the structural change in retail sector was not going to slow.
In fact, the future battleground among online retailers will increasingly be in the freight area, said Mr Patel. ‘‘It’s nice having all the online stuff, but if you can’t deliver it to consumer requirements then you have basically lost the sales,’’ he said.
Australia Post is assuring it has capacity for future demand, he said. Bigger retailers would also be looking at their supply chain to ensure they can take orders and deliver in a 24-hour environment.
‘‘Even if interest rates decline, we haven’t seen the end of households deleveraging and continued growth in online retailing particularly [from] overseas,’’ he said.
Recognising the shift in the retail sector, Australia Post has moved deeper into the online delivery space in recent years, creating a commercial relationship with online shopping group Tarazz, which helps consumers purchase from offshore sites.
Australia Post has also inked a deal with Farmhouse Direct to offer competitive pricing on fresh produce shipped nationwide. Under the terms of the deal, Australia Post will sell its 50 per cent share of air freight group Australia Air Express to Qantas. AAE will continue to provide air freight services to StarTrack and Australia Post. Australia Post said it has no plans to change the current management or operations of StarTrack which will operate as a stand-alone brand within Australia Post.
