Australia Post Increases Online Reach

Australia Post has unveiled plans to increase its online retail presence with a 50% purchase of Star Track freight, in a deal with Qantas which is valued at $408-million. The move has been said to be in response to demand for online shopping by the Australian public and a consumer need for cost-effectiveness, flexibility and speed to keep up with the pace of daily living.

Star Track is Australia’s largest delivery network and the acquisition will enable Australian Post to serve the needs of the growing online market. National Australia Bank has approximated the market value of the online retail shopping sector at $11.9-billion, an increase of 22% between August 2011 and August 2012.

Australia Post will be able to take advantage of Star Track’s existing infrastructure which comprises track and trace technology and a network that is already fully automated. The freight company has about 3700 employees and its core service offering consists of same day, next day and weekend delivery services.

Analysts have welcomed the strategy as a proactive move for Australia Post, saying that future competition within the online retail sector would be in freight and that the company has given itself a sustainable advantage, considering that Star Track already has the requisite infrastructure. Analysts also believe that the internet’s online shopping mecca will be one market unaffected even if interest rates are subject to further cuts. The move will also complement an earlier decision by Australian Post to partner up with Tarazz, an online group that enables locals to purchases on foreign websites. In a separate deal Australia Post has also partnered with Franchise Direct which offers competitive rates for the shipment of fresh produce throughout the country.

In the deal Australia Post will sell half of its Australia Air Express share to Qantas and AAE will take care of air freight requirements for AP and Star Track. The company has indicated that the operations and management of Star Track will remain unchanged and the freight company would retain its corporate identity as a separate brand within the AP umbrella.

In other news,the Australian Chamber of Commerce and Industry has voiced its support for a lower corporate tax rate to be implemented but says it should not replace other tax concessions for businesses. The comments have been made in light of the federal government Business Tax Working Group which has been tasked with the arduous process of trying to lower the current corporate tax rate of 30%.

ACCI Director Greg Evans cited Asian markets as a good example of a competitive company tax structure, at only 23%. He says the ACCI supports the decision to find a solution but not if it means that other tax benefits enjoyed by companies would need to be sacrificed.

The comments also refer to the ACCI’s latest survey which found that government charges and business taxes were the leading restriction on investment for 17 consecutive quarters. Evans also indicated that the business market was sensitive to the possibility of tax increases, in anticipation of the mid-year budget which is due to be released before the end of this week. He reiterated that most businesses wouldn’t be able to afford further tax increases. His comments are apt as a number of operations are looking to lower overheads by using virtual offices. Virtualized solutions for offices, as provided at http://www.regus.com.au/products/virtual-offices/index.aspx, help businesses cut rental and staff costs through the use of virtual office bundles.

He also intimated that an increase to GST would be unlikely and that the current economic climate wouldn’t allow for GST to be increased at this time. He did say that it could be on the horizon for later on and that broadening the range that GST was applied to (like education, health and fresh food) would not be out of the question when the time came to make changes.