ARC recently hired Bob Gill, who lives in Singapore, as our General Manager for Southeast Asia. Bob is a former editor of Logistics Insight Asia. For today’s column, I thought I’d tap some of that experience by interviewing Bob.
Steve: Bob what is hot in logistics in Southeast Asia?
Bob: Well, one thing I’ve been paying attention to is Postal Logistics. If you’re anything like me, then one of the first things you’re likely to do every morning is check your email. It’s supplanting letters, or “snail mail”, as the somewhat derisory, but not wholly inaccurate, term goes.
So as the physical goes digital, there is and will continue to be an inevitable impact in terms of declining letter volumes on the traditional mail service. Singapore Post (SingPost), however, is one example of a domestic provider that has been transforming its business in recent years in order to not only mitigate but ride on and take advantage of the digital trend. And it’s seeing success.
This May, SingPost announced a very healthy 25 percent increase in revenue (US$527 million to $657 million) for the financial year ending March 31. And the star performer? Its logistics business, which saw revenue grow more than 50 percent (helped by acquisitions) to $295 million.
What SingPost has been doing is, crucially, is turning its attention from letters to parcels and building out a logistics infrastructure – warehousing, value-added services, transportation, last-mile fulfillment, etc. – in Southeast Asia to take advantage of the huge but still relatively nascent boom in online shopping and the consequent demands for rapid and reliable e-commerce fulfillment. Revenues from its e-commerce related activities now make up just over a quarter of SingPost’s total revenue, from almost nothing a decade ago, and are forecast to grow double digits for some time to come.
Steve: In North America, I believe the hottest supply chain trend is the growth of omni-channel logistics. Omni-channel is an initiative by brick and mortar retailers to better compete against pure-play ecommerce retailers by integrating their stores and e-commerce channels. So a retailer might support buy online, pick-up at store; or order online, deliver to home from a store; several other fulfillment paths are also possible. How is omni-channel playing out in Southeast Asia?
Bob: Some of the capabilities SingPost has developed can aid either a brick and mortar or pure e-commerce retailer. One particularly visible part of this logistics infrastructure in Singapore is the POPStation (Pick Own Parcel Station). Recognizing that a large part of the e-commerce demographic is out at work during the day when most parcel deliveries are made, this neat solution enables customers to conveniently (24/7) collect purchased goods from specially constructed lockers, after receiving a coded text message (which is used to unlock a specified locker).
SingPost has also been active at the upstream end of the chain, by establishing e-commerce shop fronts and integrating with logistics IT elements such as WMS, to enable companies, including the likes of Adidas and Quiksilver, to quickly connect with and serve the burgeoning and online-savvy consumer base in Southeast Asia.
Steve: So Quiksilver is a retailer with stores, correct?
Bob: Yes, correct.
Steve: And Adidas is a manufacturer looking to improve their e-fulfillment capabilities. Are there any e-commerce retailers similar to Amazon active in Southeast Asia?
Bob: Just a few days after SingPost’s financial results were made public, it was announced that Chinese online shopping giant (it’s bigger than Amazon, in fact, it’s easily the biggest in the world in terms of total dollars transacted on the platform) Alibaba Group was taking a 10 percent stake ($250 million) in SingPost. For Alibaba, a chief draw was access to SingPost’s high-level logistics capabilities in the Southeast Asia region. Discussions are currently ongoing between the two companies with respect to a proposed joint venture around an international e-commerce logistics business.
Steve: Well that is interesting. As that new e-commerce logistics business builds out, I may swing back around and have you provide some details.
Bob: I’d be glad to.