Local businesses say they have little choice but to pass on “massive” Australia Post fuel surcharges to consumers, affecting everything from infant formula to outdoor equipment, as inflationary shocks ripple through the economy.
In a Tuesday email to its contract customers, which generally ship more than 2,000 parcels a year, Australia Post said the new surcharges reflect how conflict in the Middle East is affecting its own fuel costs.
From April 23, the fuel surcharge applied to Australia Post domestic parcel deliveries and StarTrack Courier services will more than double from 4.8% to 12%.
The surcharge applied to StarTrack Express and StarTrack Premium deliveries will increase from 15.5% to 22.7%.
MyPost Business customers and everyday retail customers are not affected.
Smarter business news. Straight to your inbox.
For startup founders, small businesses and leaders. Build sharper instincts and better strategy by learning from Australia’s smartest business minds. Sign up for free.
By continuing, you agree to our Terms & Conditions and Privacy Policy.
A portion of the email Australia Post sent to contract customers on Tuesday. Image: Supplied
Customers “highly affected”
Ben Chester is uniquely exposed to those rising fuel costs.
He serves as chief operating officer for both Sprout Organic Nutrition, which produces plant-based infant formula, and Better Brands, a 3PL provider servicing D2C brands in the health, wellness, and eco-friendly sectors.
Both businesses are Australia Post contract customers and rely on its extensive network for a large portion of their deliveries.
“Our customers will be highly affected by this,” Chester told SmartCompany.
Sprout has free shipping thresholds, “where if a customer buys a certain amount of product, we can absorb the shipping price in our margins,” he said.
That threshold will be “increased significantly now, just because we can’t cover those costs, otherwise those costs will be directly felt by the customer when they’re buying”.
Related Article Block Placeholder
Article ID: 333511
Sprout is assessing ways to prevent passing further price hikes on to customers, Chester said, noting the needs of its customer base on subscription plans.
“Our product is a sole source of nutrition for some mums,” he said.
“It’s not an optional product. It’s not generally a discretionary product.
“It’s something that when you’re feeding babies, you have to get the product to them, and there’s really no choice about that.”
Better Brands uses about 15 logistics partners, many of which have issued similar fuel surcharge increases in response to the fuel supply crunch.
But Chester said the Australia Post fuel surcharge increase is the highest it has faced to date.
The Burleigh Heads-based 3PL business can divert some deliveries through other private logistics providers, he said, but the Australia Post network is difficult to avoid.
“It is very difficult to fully switch over… The other providers just don’t have the networks to support national distribution to consumers the way AusPost does,” he said.
“So it is extremely difficult. They do have us over a barrel.”
Better Brands will feed those increases directly to its 3PL clients, he said, noting the monthly increase is roughly equivalent to the business’ standard payroll run.
More businesses speak out
Ben Van der Veen operates Hunt the Night, a Victorian business specialising in hunting firearms, ammunition, and optics.
The business is an Australia Post contract customer that ships in excess of 50,000 parcels each year, he told SmartCompany.
He said it has no choice but to pass on the “massive” surcharges when they take effect.
“Given the low margin nature of our business, we’ll be passing on all the rate rises, unfortunately,” he said.
In its email, Australia Post acknowledged how new fuel surcharges will challenge its contract customers.
“We carefully consider any pricing changes and the impact on our customers,” said the Australia Post team.
“We’re mindful of the current economic pressures impacting Australian consumers and businesses and understand these changes are never easy.”
News of those incoming surcharges arrived just days after plumbing giant Reece said its suppliers were lifting prices as much as 36%, demonstrating the widespread inflationary effect of the ongoing conflict between the US, Israel, and Iran.
Elsewhere, ride-share company DiDi is now offering extra cash payments to drivers to help them cope with soaring petrol prices.
