Border tech needed as online sales grow

With rising numbers of parcels coming into the country, Australia Post and Customs need to improve the way they process packages, according to the Productivity Commission. However, implementing the technologies to speed processing depends, in large part, on other countries, according to Australia Post.

(Portrait of a Shopping Trolley image by Timothy Allen, CC BY-SA 2.0)

The Productivity Commission has been conducting a review into the economic structure and performance of the retail sector. One of the things it is examining is whether the $1000 dollar threshold, below which imported goods are not taxed, needs to be lowered. The Productivity Commission recommended, in its draft report on the matter, that the threshold be lowered.

Currently, Australia Post presents incoming international post articles to Customs and Quarantine, which conducts risk assessment and screening. Australia Post notifies package recipients on whether they need to contact Customs about tax. If the threshold was lowered, tax would have to be collected on many more items.

The commission noted in its report that the parcel-handling process was already struggling under a recent increase in the number of incoming international packages, which Australia Post laid partly at the door of the trend to shop online from overseas websites.

Australia Post said in its submission (PDF) to the draft report that the number of packages coming in had increased by 56 per cent in the 2010/11 financial year. The previous year had only seen 28.1 per cent growth. This had led to Australia Post increasing the number of full-time workers at international gateways by 24 per cent in 2010/11 over the previous financial year.

The Commission asked why the current parcel-handling processes were "so manual and 'clunky', given the availability of sophisticated tracking and parcel information systems of the express couriers", which it said were "clearly superior to the mail system at this point". Other countries, where the threshold was lower, have introduced better postal and customs systems to handle greater numbers of items.

Australia Post said in its submission that Customs, Quarantine and Australia Post were "actively seeking ways" to manage increased volumes, with a focus on an "intelligence-led, risk-based approach" for screening parcels.

However, Australia Post noted that adopting technology to manage volumes wasn't as simple as installing a new system, since it would require systems to be installed at the country of origin to, for example, pre-inform Australian authorities of what was being sent.

"The [Universal Postal Union] has 191 member countries, the vast majority of which are developing and least-developed countries. While UPU member countries have made some progress in using information technology and the linking of their automated international mail management systems, there is still considerable progress to be made in extending electronic data interchange to the entire postal logistic chain, including customs clearance," it said in its submission to the draft report.

"As the Productivity Commission notes [on page XXXIII of draft report], many UPU member countries just do not currently have the capacity to incorporate significant technological improvements to their postal systems that would permit pre-advice of their outbound postal articles."

The Commission acknowledged that Australia wasn't in the position to impose conditions on other countries' mail systems. However, it still believed that technology could be introduced to improve processing of items from some countries via bilateral and multilateral agreements.

Australia Post has agreed with the commission that something needs to be done.

"Australia Post agrees with the Productivity Commission's assessment that the current border screening and examination processes at the international gateway facilities would benefit from improvement. While the current processes have served Australia well for a long time, the rapid change in technology, and the exponential growth in e-commerce, mean a new model is needed for the long-term sustainability of the border screening processes for incoming international postal articles."

The commission has suggested that the government should establish a task force of independent experts, advised by Customs, Australia Post and courier services to investigate new processing methods for parcels in order to minimise manual handling. Australia Post welcomed the suggestion.

The commission suggested looking at an up-front tax to be collected by retailers, the use of bar codes to more easily identify the contents of parcels or the use of the postal service to collect tax charges.

Yet the costs of such moves could be high.

"The commission understands that the investment required in the mail system is likely to be significant, and, because of the very high volumes passing through the postal system, it could take some years to reach full implementation," it said.