News

In a pilot, Coles supermarkets has partnered with drone-delivery service Wing to deliver popular grocery items to consumers. 

Customers in Canberra can choose from more than 250 items including bread, fresh produce, snacks, convenience meals, health care items, and kitchen essentials and have them delivered by a drone in minutes. 

Coles chief executive e-commerce, Ben Hassing, described drones as the next evolution in delivery technology, saying it will help reduce the number of trucks on the road.

“By partnering with Wing, we’re able to offer our online customers another convenient option to purchase the Coles items they know and love and get them delivered straight to their door.”

Simon Rossi, GM of Wing Australia, said the partnership will offer online customers a convenient option to purchase groceries from Coles.

“In the past year, we’ve seen a significant increase in the use of our on-demand drone delivery service, with many customers finding the service especially useful as they stayed home, and relied on our contactless delivery service to deliver the items they needed.”

Wing has completed more than 100,000 drone deliveries in Australia, and in just the first two months of this year, has already surpassed 30,000 deliveries.

The service will operate between 8am to 4.30pm on weekdays and Saturdays and from 9am to 4pm on Sundays. Customers can place a delivery order during this time via the Wing app available to download on the App Store or Google Play.

Hotel and liquor business Endeavour Group has delivered a strong first-half sales growth to an estimated $5.7 billion.

On a two-year comparison – that measures the latest performance against the last comparable pre-Covid trading period – sales were up by 18.4 per cent.

EBIT increased by 10 per cent to $461 million. The company says ongoing investments made to in-store and online customer experience channels strengthened customer metrics for both Dan Murphy’s and BWS stores.

Due to Covid-related store closures during the first four months of the financial year, online sales grew by 24.8 per cent contributing $603 million. 

Through promotional activity in the lead up to Christmas, The My Dan Murphy’s program grew to 6.2 million members at the end of December, a 21.6-per-cent year-on-year increase. Beer and cider sales recorded a major decline compared to the previous year, with consumers taking a newfound interest in craft offerings, and gin and seltzers becoming more popular.

The group’s Dan Murphy’s store network grew by 24 stores to 257, with 49 refurbished during the period. The BWS network in partnership with Woolworths added two new stores and refurbished 17.

Referring to the “structural resilience” of the group, Endeavour MD and CEO Steve Donohue described the result as positive given the heavy impact of Covid during the period.

“With on-premise restrictions in place, the retail market remained elevated through the half.”

The a2 Milk Company said it expects to return to sales growth this year, but will ramp up marketing spend significantly to resonate better with Chinese mothers as it battles for its share of the world’s largest baby formula market.

The baby formula and fresh milk boss David Bortolussi said the increased revenue expected in the second half will not flow though to profitability, due to the marketing blitz in its a2 Platinum formula as more Chinese rivals launch similar products.

Marketing spend is now expected to be about $NZ220 million ($205 million) – higher than 2020 peak levels – with $NZ120 million spent in the second half, which is higher than previous estimates.

“We need to strategically compensate for the ongoing subdued reseller and daigou activity in the market that helped build a2 over many years,” Mr Bortolussi told The Australian Financial Review.

“The channel is still disrupted. In a softer overall market, where there’s intense competition, we as an aspiring market leader in the category need to invest and engage directly with our consumers.”

The dual-listed company’s shares on the ASX shot up by 11.1 per cent to $5.89, their highest close in three months, after Mr Bortolussi said the swift action taken to address excess infant milk formula inventory last year is paying off.

“I feel more optimistic about our outlook now than I did three or six months ago,” Mr Bortolussi said.

He pointed to several important factors: the improvement in brand health; China label share gains in mother and baby stores and online; and the English label channel trajectory is improving.

This led to an upgrade in revenue growth expectations for the full year – which will be higher than the $NZ1.21 billion achieved in fiscal 2021 – underpinned by China and English label formula growth in the second half.

Mr Bortolussi noted it was great to see tourists arriving back to Australia with borders re-opening on Monday, but he is not factoring in a major recovery in tourism, or the flow in international students (who acted as daigou) in this calendar year.

Despite challenging market conditions in China and COVID-19 volatility, Mr Bortolussi said a2 Milk is making good progress on its recovery strategy flagged last October, which led him to deliberately constrain product in an attempt to deal with its ageing inventory issues.

A2 Milk’s bottom line slumped 53.3 per cent to $NZ56.1 million in the first half, but this was better than analysts had expected.

Revenue was lower, in line with guidance, falling 2.5 per cent to $NZ660.6 million. Earnings before interest, tax, depreciation and amortisation fell 55.3 per cent to $NZ97.6 million in the half. EBITDA to sales margin was sliced to 14.8 per cent, compared with 26.4 per cent a year ago.

The Australian and US premium liquid milk markets grew, while COVID-19 and other external factors continued to affect the company’s supply chain.

Wooing China

The China infant formula market is the largest in the world, with retail sales of about $NZ47 billion, but the birthrate was down 11.5 per cent in the calendar year. Chinese consumers are also looking to local competitors such as Feihe and Junlebao over international brands.

Mr Bortolussi said there was likely still “more pressure to come” on the absolute number of new births given social demographics and the impact of COVID-19, which likely delayed some pregnancies.

Mr Bortolussi did not provide firm guidance but expects second-half gross margin percentage to be broadly similar to the first half, given last May a2 Milk implemented prices increases in its English label product.

Chief financial officer Race Strauss added that further cost increases in milk and some packing materials will be recovered by more price increases this half.

BAML analyst David Errington said Mr Bortolussi had done a “terrific job” stabilising the group in the last six months. “You must take a lot of pride in that, well done,” he said on a call.

Morgans analyst Belinda Moore said given the better than expected first half profit, full-year upgrades are likely follow, while Citi analyst Sam Teeger said the result, outlook and net cash position has allowed for greater conviction in the new management’s ability to turn around the business, and support his ‘Buy’ rating.

A2 Milk has appointed Sandra Yu, who was the former head of Mead Johnson Nutrition’s Greater China business, has as an independent non-executive director of the company from March 1. Ms Yu replaces Bessie Lee.

The chairman David Hearn is also now considered to be an independent director since Mr Hearn held executive options in prior years, which have now all been exercised, and Mr Bortolussi has full executive control of a2 Milk.

Coles Group boss Steven Cain says the possible invasion of Ukraine by Russia and a worker shortage in Australia due to lack of migration are two events that could keep inflationary pressures up at the retailer.

Mr Cain told The Australian Financial Review that global events like oil prices jumping on the back of tensions between Russia and the West over Ukraine, and the lack of backpackers coming to Australia, means wage inflation will increase.

“Everyone [is] aware of what that [Russian invasion] might do for energy and oil prices,” he said. “Clearly in Australia, we’ve got a bit of worker shortage in some areas around backpacking, hospitality, technology and if more people don’t come to the country, then you can imagine that wage inflation will increase.”

Mr Cain believes that cost-conscious consumers will seek cheaper, but higher-margin, Coles-branded products amid rising costs like fuel and interest rates putting pressure on budgets.

“I’m afraid my crystal ball isn’t going to be able to predict exactly what’s going to happen over the next six months but what I would say is that I would expect home brand penetration to continue to increase for those who are looking for value,” he told analysts on a call.

“But equally, we should recognise that there’s more than $100 billion more in consumer bank accounts in the world pre-COVID and for a lot of people there’s still plenty of disposable income.”

The $23.1 billion company is aiming to generate 40 per cent of its sales from its home brand products, up from 32 per cent. It added over 840 new home brand products in the first half, including Coles Kitchen’s range of pasta and family salad kits.

Mr Cain said there is some price pressure coming though in this new half after operating in an overall deflationary market in the first half when rises in red meat pricing was more than offset by fresh produce deflation in fruit.

It was still too early to tell if there would be significant shelf price increases later this year, but he expected local and global input prices and various supply chain costs to rise.

Coles’ sales were elevated in early January as the virus ramped up on the East coast, but has since moderated, with a variation in sales on store locations, and state to state.

Following the recent rail line washout, packaged food arrivals into WA has been extremely disrupted, and Mr Cain expects those constraints will not be ironed out until Easter.

Mr Cain’s comments came as Australia’s second-largest food and liquor retailer managed to increase sales by 1 per cent to $20.7 billion in the first half of 2022, with shoppers emptying shelves as COVID-19 lockdowns hit across the eastern seaboard and customers spent up on premium products at rock lobster, croissants, and macarons at Christmas.

The company reported a 2 per cent drop in bottom-line net profit to $549 million for 27 weeks ended January 2 – comfortably topping analysts’ consensus forecasts for net profit after tax of $528 million.

Earnings before interest and tax fell 4.4 per cent to $975 million.

Gross margin gains in supermarkets and liquor cushioned earnings from higher COVID-19 costs which reached $150 million in the period – $45 million more than a year ago. Coles spent an additional $30 million in costs in January alone as omicron peaked, which is now moderating in February.

Coles declared a steady fully franked interim dividend of 33¢ a share.

Mr Cain said sales remained elevated in the first quarter and in the early part of the second quarter, largely a result of lockdowns across NSW, the ACT and Victoria.

Coles’ sales rose 1.1 per cent to $18 billion in the half year, supported by comparative sales growth of 1.5 per cent, and on top of the strong COVID-19-driven growth of 7.2 per cent in the prior period.

Supermarket earnings inched lower by 0.8 per cent to $896 million.

Liquor sales rose 2.7 per cent to $2 billion, as same-store sales increased 1.2 per cent, supported by wine and RTDs. Liquor same-store sales growth of 2.1 per cent in the second quarter was better than rival Endeavour Retail, which fell 1.6 per cent.

Convenience store sales fell 8.5 per cent to $578 million, while earnings tumbled 62.5 per cent to $12 million due to weaker tobacco volumes and the loss of excise earnings.

Jefferies analyst Michael Simotas called it a “solid, clean result” with the key supermarket and liquor businesses both better than expected due to higher margins.

“Cost control was much better than Woolworths with COVID costs moderating slightly in 2Q from 1Q levels. Stock should trade well,” he said in a note.

Contact Asset Management portfolio manager Will Culbert said while it has been a mixed start to the year in terms of foot traffic and staff shortages, he expects that gross profit margin pressure should ease, but might not show up in Coles’ results until the second half of this calendar year. “Longer term, growth in eCommerce and upgrades to distribution centres and the introduction of new fulfilment centres should improve efficiencies and maintain or even grow margins,” he said.

Investors liked the news, pushing the stock higher by 3.17 per cent to $17.27.

Mr Cain added its Smarter Selling program is on target to deliver $1 billion and cost savings by fiscal 2023, its first Wiltron automated distribution centre is set to open in Queensland next year, which will increase efficiency further.

Coles and British online food retailer Ocado rejigged their agreement whereby Coles will manage the online store and web presence for the intake of orders, and Ocado will provide automated fulfilment functionality and as well as last-mile solutions.

Mr Cain expects that as COVID-19 restrictions fully ease and people head back to the office Coles CBD locations will gain, and shopping centres will come back to life.

“Overall, we’re pretty optimistic that we’ll see a continued improvement to market share,” he said.

As for staffing issues, Mr Cain noted Coles had a record year in terms of recruitment but “availability can still be better” despite supply chain issues easing which was hampered by staff needing to isolate.

The head of supermarket giant Coles has warned inflationary pressures across all categories of groceries are the worst they’ve been in recent times, with the cost of a weekly shop likely to get more expensive.

Coles chief executive Steven Cain told The Age and The Sydney Morning Herald the impact of inflation has already been evident in categories such as red meat and packaged goods, but pricing pressures were starting to expand to more and more items.

“[Inflation] has been going on in certain categories for quite some time, but the level of across the board cost inflation that we’re seeing hasn’t been seen for quite some time,” he said.

“That will impact part of the community that we will have to look after.”

Coles will look to absorb what price increases it can, however, Mr Cain noted the level at which the supermarket can do this will vary by product but said the company would try and focus as much on “value” as it could.

“We’ll be looking at some of the cost price increases that we accept and think about if they can be passed on in dollar terms or in percentage terms and still remain competitive,” he said. “We’ve also got to do a job for our shareholders as well.

“The best way of doing a job for your shareholders is to please as many customers as possible in the first place.”

On Tuesday, Coles unveiled its results for the first half of the financial year, a period that saw the company’s earnings crimped as the retailer was forced to spend millions on rapid tests and additional workers as COVID-19 heavily affected operations.

Sales for the six months to the end of December rose 1 per cent to $20.8 billion but earnings before interest and tax fell 4.4 per cent to $975 million, as the company weathered a massive increase in COVID-related costs as the Delta outbreak wreaked havoc on Coles’ supply chains and workforce.

Coles said it incurred $150 million in additional COVID-related costs for the half, up from $105 million in the prior period. This was largely within the company’s supermarkets division and was related to worker isolation requirements, rapid antigen tests for staff, and the cost of hiring additional workers to ensure customers were scanning QR codes on entry.

This result was in line and even slightly ahead of expectations, which had predicted EBIT of around $965 million. Shares in the business rose 3.29 per cent to $17.29, with analysts labelling the half as “clean” and potentially better than rival Woolworths, which reports its half-year on Wednesday.

“Coles has delivered a solid result, particularly in light of fears about escalating COVID-19 costs putting a major dent in earnings. The company’s sales trends compared with industry growth continue to improve,” MST analyst Craig Woolford said.

Coles, along with many other retailers, has struggled with COVID-19 disrupting its local supply chains and workforce, as heightened infections thanks to Omicron caused a high level of absenteeism in staff. Mr Cain said the labour market had improved but staff availability “could still be better”.

For the start of the second half, Coles said trade started off strong due to the Omicron outbreak, before moderating later in January. Across states, sales have variated significantly, Mr Cain said. An additional $30 million in costs were incurred during the month, a figure the chief executive said he hoped would ease through the half.

At the company’s supermarkets division, sales gained 1.1 per cent to $18 billion. Liquor sales had a stronger half, up 2.7 per cent to $2 billion off the back of stronger e-commerce sales. However, Coles’ Express petrol station business saw revenue slide 8.5 per cent to $578 million and earnings more than halve as lockdowns significantly reduced petrol volumes over the period.

Coles declared an interim dividend of 33 cents a share, flat on last year’s interim dividend and payable on March 31.

Costa Group’s chief executive has said the opening of the economy should help its underperforming avocado business recover and lift profits after revenue in the category was hit by the pandemic lockdowns.

The fruit and vegetable group’s net profits rose 16.2 per cent to $64 million last year, largely driven by global appetite for berries, but its avocado business underperformed with revenue down 21.7 per cent.

Chief executive Sean Hallahan said an oversupply of the ‘green gold’ was pushing prices down to $1 an avocado and denting the company’s 2021 profits.

“When you’re selling avocados at a dollar, I can tell you there’s not a farmer anywhere in Australia who’s making money out of that, and it’s not sustainable,” he said. “It’s really disappointing.”

He said the company was hoping the avocado category would recover as the economy reopens and Australians dine out. “There’ll be the food service market opening up, so there’ll be many more cafes with smashed avocado breakfasts going on,” Mr Hallahan told the Sydney Morning Herald and The Age.

“Get out there and tell your friends to … order the odd smashed avocado breakfast. And then what’ll happen is we’ll have a bit more volume going into food service rather than retail, so our returns in retail should improve.”

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 10.6 per cent to $218.2 million in 2021 compared with 2020. Costa shares rose 8 per cent to $3.24 in Tuesday’s trade.

Total revenue remained steady at around $1.2 billion. The company will pay a fully franked dividend of 5 cents per share on April 7.

Costa Group’s international business - particularly in berries - became a major profit driver for the company in 2021, growing by 30 per cent and comprising more than a quarter of total sales.

Costa Group’s domestic portfolio has started 2022 on a solid note with stronger volumes across berries, tomatoes and mushrooms.

The $1.4 billion company will look to drive earnings growth by harvesting its new 50-hectare berry farm in Baoshan, China, contributions from recently-acquired citrus empire 2PH Farms, increased premium blueberry volumes and a rebound in grape volumes.

In a note, Jarden analysts said the financial numbers were a “good result”, with net profits and EBITDA above consensus forecasts. “This result should be taken well by the market given the strong start to [the 2022 calendar year], which is consistent with data we track,” the analysts wrote.

“We expect growing confidence in the ability to hit [or] exceed this figure given the strong start. Stock should trade well today.”

Factors such as weather and demand continue to be risks for the business, the analysts added.

Global online health and fitness platform, The Healthy Mummy has been acquired for $17 million by Halo Food Co.

The brand offers mums a range of health and wellness programs that include exercises, supplements information, recipes, and merchandise. It was founded by Rhian Allen in 2010 and operates in the UK, the US and Australia. 

The business boasts more than 86,000 digital subscribers hence the acquisition will add sizeable cross-brand sales to Halo Food Co’s profit mix.

Halo Food Co is a product development company in Australia and New Zealand. The ASX-listed company’s manufacturing capabilities will aid The Healthy Mummy product profile to expand and develop in order to scale the business further.

“To say we are a customer-centric business is an understatement and I have and will always strive to make every customer and mum happy with what we offer and do as a business,” said Rhian Allen, founder of The Healthy Mummy.

“Partnering with Halo Food Co was something I feel very happy about as I firmly believe that the Halo team will help to further my own vision and belief of ‘customer first’ and will allow us to serve you better with incredible product innovation and an even wider range of products,” she added. 

“The business is a natural fit to the existing Halo business, increasing the lifetime value of customers to the group and adding high margin digital distribution channels and cross-sell capability that would otherwise take years to establish organically,” Halo CEO, Danny Rotman, told The Market Herald.

Since last year, the e-commerce company has started selling its products at physical retail stores including Priceline Pharmacies. 

Treasury Wine Estates is looking to meet Chinese appetite for its Penfolds wine by growing the grapes for the famous brand in France as heavy import duties hinder Australian Penfolds from reaching China’s shores.

Tariffs on Australian wine imposed by Beijing of up to 200 per cent have seen the winemaker pivot away from China overall and double down on efforts to push sales in other markets, particularly the United States and Asian countries such as Hong Kong, Singapore and South Korea.

But Treasury Wine chief Tim Ford said consumer demand for Penfolds in China remained strong, prompting the company to also look at new ways to provide the luxury wine.

“At the moment, certainly demand exceeds supply for Penfolds in that market, there’s no question about that,” with just a small amount of Australian Penfolds going through to China, he told The Sydney Morning Herald and The Age.

Efforts to resurrect the company’s business in that market will likely mean that Chinese connoisseurs won’t be drinking Penfolds made from Australian grapes anymore, he indicated, with plans to launch a French Penfolds collection in August. The wine will be grown in Bordeaux.

It’s a strategy the company has already tried in the US, where it planted grapes from a South Australian vineyard in California 30 years ago to start production in the world’s largest economy.

“It’s going to take us multiple years as we build up our luxury wine portfolios out of France and America to really meet that demand over time, and we look at that as a long-term journey to rebuild our market there in China,” Mr Ford said.

Teaming with Snoop Dogg and Martha Stewart

In the meantime, the $7.6 billion winemaker’s strategy to push sales in other markets is paying off, with net sales revenue for Asia excluding China jumping 119 per cent in the first half of the 2022 financial year compared to the same period last year.

Net sales revenue for Penfolds in America grew by 37.9 per cent and sales in Europe, the Middle East and Africa (EMEA) increased by 15.4 per cent.

As part of its US strategy, the Australian winemaker has partnered with gangsta rapper Snoop Dogg and most recently Martha Stewart to sell ‘Cali Red’ and ‘Martha’s Chard’ under its 19 Crimes wine label, which is popular in the US.

Mr Ford hinted that the company was looking to strike up another high-profile partnership, but wouldn’t reveal whether this would involve an Australian celebrity.

Mr Ford made his comments after the winemaker on Wednesday reported a 7.5 per cent fall in net income to $109.1 million for the six months of its 2022 financial year. Earnings before interest and taxes dropped 6.7 per cent to $262.4 million.

Mr Ford said he was “very pleased” with the company’s performance in the December half given the “effective closure” of the mainland Chinese market. Earnings before tax and interest grew 28 per cent outside China, he pointed out.

While Penfolds’ earnings before interest and taxes slid by 17.4 per cent to $165.1 million, the Treasury Americas and Treasury Premium Brands divisions saw earnings before interest and taxes rise 26.9 per cent and 20.7 per cent, respectively.

‘Better than feared’

Investors reacted positively to the result, sending the company’s share price 11.7 per cent higher to $11.77.

Jarden analyst Ben Gilbert said it was a “strong result that should give the market confidence in [the company’s] ability to position the business to deliver higher sustained returns”.

“This, coupled with [the] shift to luxury [pricing power] in an inflationary backdrop, should see Treasury Wines do well from here,” he wrote in a note to clients.

Investment bank Barrenjoey analysts described Penfolds’ earnings as “better than we feared”, while analysts at research platform MST Marquee said Penfolds’ underlying performance was “solid”.

While Penfolds’ China woes were weighing on the result, Mr Ford said that all three company divisions were on a “clear and positive trajectory” towards long-term growth targets. “We have shifted our focus from a mindset of ‘recovery and restructuring’ to one of ‘growth and innovation’.

“We have great confidence that by leveraging the unique strengths of our businesses - our people, our brand and our asset base - we are well-placed to capitalise on the significant opportunities across the global markets in which we operate.”

The winemaker, which late last year said it was preparing to increase prices amid inflationary pressures, signalled again that further price rises were ahead.

“Supply chain and logistics costs are expected to remain elevated in [the second half of 2022], with price increases to be implemented across select portfolio brands to partly mitigate impacts,” the company said in its trading update to the ASX.

Treasury Wines maintained a fully franked interim dividend of 15 cents per share.

West Australian cafes may have to take carbonara pasta dishes off the menu as the state’s food supply crisis intensifies, leading to shortages of cream, bacon and other perishable items, the deputy chairman of Perth’s biggest independent food distributor has warned.

“There is a lot of product that has not made it across [to WA],” said Damon Venoutsos, deputy chairman of NAFDA Foodservice, a national distributor.

NAFDA’s WA facility typically gets several food deliveries each week from the eastern states and supplies Perth’s Optus Stadium as well as aged care homes, corner shops, cafes, bakeries and fast food outlets such as pizza and kebab shops.

The disruption to deliveries because of flood damage on the nation’s trans-continental rail link – which brings most of the food sourced from the east across the Nullarbor – was “way worse” than previous COVID-19-related supply chain interruptions, Mr Venoutsos said.

Food items that NAFDA is running out of in WA include bacon, ham, salami and other continental meats, beef and pork sausages, cream, mozzarella cheese, and plant milks such as almond and oat milk as well as Tasmanian salmon.

Although cafes serving fettucine carbonara should be able to get hold of dry products such as pasta, they will struggle to get enough cream, cheddar and bacon to make the carbonara sauce, Mr Venoutsos said. “You can order it with tomato sauce maybe, or maybe some dried herbs.”

Jeff Adams, chief executive of the Metcash Group that supplies IGA supermarkets, said retailers in WA were sourcing milk and most meats locally, as well as “a significant percentage” of yoghurt, and had contingency plans in place to deal with shortages, including holding on to stock and trying to move goods into the state via trucks.

“We do, however, expect some transport challenges over the coming weeks, and are working closely with government, suppliers and retailers to keep IGA stores in WA stocked throughout this period,” Mr Adams said.

All options being assessed

Mr Venoutsos said he had spoken with the WA government about the crisis. The possibility of using a Hercules aircraft to fly in food if the crisis worsened had been raised in discussions.

The WA government said it was working collaboratively with the federal and other state governments to ensure freight supplies, and that all options were being assessed.

The Defence Department was yet to respond to questions on whether emergency airlifts had been discussed. The defence force has been dropping food supplies into South Australia’s Coober Pedy, which has been cut off by the floods.

NAFDA was trying to find trucks to move fresh food from the eastern states to Perth but hiring them would cost tens of thousands of dollars, and there continued to be a shortage of truck drivers – who also need approval from the WA government to enter the state, Mr Venoutsos said.

There had been talk of using ships to bring supplies to the west coast but these were unlikely to be fast enough, he said.

No quick fix

Richard Forbes, chief executive of industry group Independent Food Distributors Australia, whose members provide supplies to 6500 venues in WA, said thousands of tonnes of food were usually transported daily into the state over the trans-continental rail line and there was no quick fix to the crisis.

“We’re in dire straits ... this is the worst disruption to the food supply chain into Western Australia our members can remember,” Mr Forbes said.

“We are speaking to various ministerial offices in WA to try and find a solution to the problem but do not believe the situation will fully back to normal for between four and six weeks.”

The east-west rail line is not expected to be fully operational until at least mid-February.

Woolworths’ supermarkets in Perth are running low on fresh meat including beef cuts as well as dry products such as pasta and toilet paper. Signs in the supermarkets warn shoppers to “only buy what you need”.

David Smith, the managing director of D&S Smith Haulage and also chairman of the Australian Trucking Association, said moving goods by truck to WA and the Northern Territory while the east-west rail link was being repaired took twice as long as moving goods by train.

“It becomes a logistical nightmare,” Mr Smith said, adding that about 110 road trains with three trailers each would need to travel to Darwin every week to keep delivering the same amount of goods that usually were sent on a combination of road and rail. “There’s not that much equipment and there’s not that many drivers to do that task.”

Truck drivers are in short supply because many are isolating because of having contracted COVID-19 or waiting for test results.

Mr Smith has asked the National Heavy Vehicle Regulator to consider alternative trucking routes to get essential goods into all capital cities in case of future catastrophes.

Global restaurant chain KFC launches its first drone-delivery service, partnering with Wing, to deliver hot food direct to homes and workplaces in Logan, Queensland. 

The drone-delivery service will be available to a small number of households in the South East Queensland suburbs of Kingston, Logan Central, Slacks Creek, Underwood, and Woodridge, and will gradually expand to include other nearby locations.

A ‘cloud’ kitchen has been developed in partnership with Collins Food Limited, KFC Australia’s largest corporate franchise partner. The kitchen will prepare KFC’s chicken ready for drone delivery, allowing customers to get their KFC within minutes.

“We’re always looking for ways to enhance the customer experience. Given the last 18 months, Australians have relied on delivery more and more, so it’s great to be making life easier for fans who want to get their hands on KFC in a flash,” Kristi Woolrych, CMO KFC Australia said.

Customers will have to download the Wing delivery app from the App Store or Google Play, enter their address and submit their orders. The items will be prepared by the KFC team and despatched without any delivery fees.

Dave Ojiako-Pettit, Wing’s city manager in Queensland, says there has been a significant increase in drone-delivery services in South East Queensland recently.

“Wing has made more than 100,000 deliveries to the Logan community last year, with many customers finding on-demand drone-delivery especially useful as they stayed home, and relied on our contactless service to deliver the things they needed,” said Okiako-Pettit.