Rosier outlook for Asean e-commerce logistics with enhanced capabilities after COVID experience

16, Oct. 2020

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By Charlotte Chong

As the coronavirus pandemic pushed e-commerce to the forefront of retail during movement shutdowns across the world, delivery companies had to grapple with rising mountains of parcels to be despatched to awaiting buyers confined to their homes.

So, it wasn't a surprise when Parcel Monitor and e-commerce aggregator iPrice Group collated findings and saw a sharp jump of 34 percent in parcel volume handled in four Southeast Asian countries during the first six months of this year.

This amounted to 1.4 million parcel shipments, or a third more than the same period in 2019, according to their joint report of e-commerce activities in Singapore, Malaysia, Thailand and Indonesia during the COVID-19 crisis which saw millions shopping from the safety of their homes.

Parcel Monitor is a global online knowledge-sharing community of logistics professionals and businesses involved in digital commerce which boomed after the COVID-19 contagion spread throughout the world from the early months of the year after the first discovery of the deadly virus in China in end-2019.

Price-comparison provider iPrice noted that online traffic for shopping during severe lockdowns surged by as high as 60 percent in April and May, which led to an increase in parcel volumes in most Asean markets.

In Malaysia, the average online shopping basket in the first half of 2020 rose by 24 percent year-on-year to 199.34 Ringgit ($48.15), according to the report. The country's Muslim fasting month in May saw a 55 percent spike in parcel delivery.

In April, online shoppers in the region were snapping up highly sought-after items like health supplements, face masks, and canned foods, according to iPrice.

"It became a priority for delivery companies to ensure that these essentials reach their destinations on time. But with logistics operations disrupted by COVID-19 worldwide, this has proven an enormous challenge," said the report.

Data on delivery speed collected by Parcel Monitor shows how difficult it was to deliver parcels to buyers on time.

Malaysia suffered the worst impact of movement restriction on delivery, with the time needed for the task increasing from an average of 2.1 days before the lockdown to 4.6 days. In Indonesia, parcels took three days to reach their destination instead of 2.3 days previously.

The situations in Thailand and Singapore were better, but even then, the average delivery time still went up by 0.2 days during the stricter shutdown months.

Ninja Van, a courier company with renowned e-commerce partners like Lazada, Shopee, and Zalora, was one of those facing the delivery challenge in varying degrees.

“Some shippers were operating on shorter hours, which are measured to ensure the safety and well-being of their staff. More bulky parcels were also being shipped, which affected productivity,” said a Ninja Van executive sharing their experiences with Parcel Monitor and iPrice.

In addition, limited flights and sailings across the region have resulted in delays and increased cost for logistics, said Timothy M. Kairuz, a business development manager at Filipino logistics provider Transglobe Logistics International Inc.

As a result, delays affected customer experience. Increase in customer complaints, missing parcels, and customer service calls led to "a poor experience for all parties involved in the delivery process," said the report, adding that it was high time that delivery companies across the region changed the way they operated.

Parcel Monitor said the potential solution is the use of the parcel locker networks installed across Southeast Asia.

It said, "These lockers help to ensure fast and flexible delivery services while minimizing direct contact between delivery personnel and customers."

The Singapore government recently announced that 1,000 parcel locker stations would be available nationwide by end-2021.

Parcel locker stations are also available in 86 Malaysia LRT stations, made possible by Ninja Van and Prasarana Malaysia Berhad under their partnership. Two other players PopBox and Box24 brought the same concept to Indonesia and Thailand respectively.

“This will be a delivery trend that will continue to grow in Asean as e-commerce logistics in the region continues to mature,” said Arne Jeroschewski, founder and CEO of Parcel Monitor.

Jeroschewski said visibility and transparency on the delivery journey will become key to improving customer experience for both recipients and merchants.

“Customers want to know where the parcels are, what’s happening to them, and when to expect their orders at their doorstep,” said Jeroschewski.

Ninja Van is already offering live tracking and a live chat feature that allows recipients to communicate directly with shippers while having full visibility of their parcels.

“We believe that being able to better connect and communicate with our shippers and parcel recipients allows the consumers to have high visibility of their parcels while staying updated about any new services or products,” said Ninja Van co-founder and CEO Lai Chang Wen.

FedEx uses a tracking device called SenseAware to give merchants and senders round-the-clock updates on a delivery package, including information on temperature and humidity, which is highly important for essential and perishable products such as medicine and fresh groceries.

Addressing manpower issues following the sharp rise in parcel volumes, each company is applying their own technological solutions to ramp up capacity, said the report.

Uniqlo, a Japanese casual wear manufacturer and retailer, will open an automated warehouse for e-commerce in Osaka by this month to speed up delivery, according to news reports.

Vietnamese express courier, Giaohangnhanh, recently opened a warehouse with an automatic-sorting capability aimed at reducing manpower by as much as 75 percent.

Parcel Monitor’s latest data shows that most of the average delivery speeds in Southeast Asia have returned to pre-COVID levels.

Malaysia’s e-commerce parcels now take an average of 3.1 days to reach buyers, which is a big improvement. However, it is still slower than delivery speeds at the beginning of the year.

Singapore’s delivery performance is back to pre-lockdown levels, while Indonesia seems to be heading back to their normal situation too.

The overall improvements seen across the region show great potential for e-commerce and parcel delivery services to thrive in Asean, said the report.

“The pandemic has shown that the demand for e-commerce is on the rise and here to stay for the long haul,” said Jeroschewski of Parcel Monitor.

She said, "There will be many upcoming opportunities for new players in the e-commerce logistics space to take advantage of this growth in e-commerce, and they may offer an even better experience to the customers.”