When did you last post a letter, buy a stamp or visit a post office? With the decline in demand for postal services over the years, Singapore Post S08 (SingPost) — the nation’s postal service provider — is shifting its focus to the logistics sector to survive and thrive, says its group CFO, Vincent Yik.
He adds: “We’re one of the top postal agencies worldwide in terms of on-time delivery and service quality, and we carry that badge of honour with great pride. The postal business used to make up almost all of our revenue. About 85% of the revenue comes from logistics and the rest from postal.”
Yik says SingPost’s transformation has fueled a substantial revenue surge over the last five years, sustaining profitability despite a 40% drop in mail volumes from 2018 to 2023. “A significant proportion of our profitability now comes from logistics, and we will continue to move into logistics and e-commerce.”
The strategic move makes sense, given SingPost’s infrastructure. Yik explains: “As Singapore’s postal company, we have a delivery network that is best in class in terms of service standards. We have the vans, the people and the distribution capacity. We can deliver to every household in Singapore. That same infrastructure can be retooled to support e-commerce deliveries.”
He adds: “We had a glimpse of this future during the Covid-19 pandemic with the surge in e-commerce volume delivery as well as test kits and masks to households.” The value of Singapore’s e-commerce sector is forecast to grow from US$5.9 billion in 2021 to US$10 billion ($13.6 billion) by 2026, presenting a golden opportunity.
“That projected value is far bigger than we ever generated in Singapore. If we can get a good part of that, it will be substantial for our Singapore business.”
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Transforming for the future
Yik acknowledges that some changes will be necessary. “E-commerce parcels come in different weights, sizes and dimensions, so some will not fit in our sortation machines, postmen cannot carry as many items in the same bag and bicycles and motorcycles may not be appropriate. We do need to revamp some of our infrastructure, and we are doing that.”
Just as important, the company is promoting a shift in mindset among its workers. Yik adds: “You can imagine that going forward, it’s not the postman delivering your e-commerce item; it’s your e-commerce courier delivering your letters. This means that people’s skills and the way they work must change.”
“It’s a journey to get people to see things differently and change how they do things, but you must be consistent until the message is ingrained. We have to sell our transformation to the people who have been in the company, those who are coming on board and our business partners. I think we have been successful in this.”
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After an eight-month strategic review of the group and its portfolio of businesses, SingPost announced in March that it would reorganise the company from function-based units — logistics, post and parcel, property and others — into three geographical segments, namely Singapore, Australia and international, as part of its plans to fully transform into a logistics company within three years.
With the new geographical divisions, each segment can focus on serving its market’s needs and have more autonomy and flexibility in pursuing growth. “We will give each of these business lines what they need in terms of resources and decision-making capabilities. The key imperative is that they must be profitable and meet a set return on the capital we put in.”
SingPost’s plans include integrating its postal and e-commerce logistics networks into a single and efficient combined network in Singapore. Yik says: “We are the only company in Singapore that goes to every address in the country daily. If we do some retooling, we can get the business to support e-commerce logistics.”
Through its investments in Australian firms Freight Management Holdings and CouriersPlease, which specialise in 4PL (fourth party) and 3PL (third party) logistics and first- and last-mile deliveries, respectively, SingPost has been building a B2B2C (business-to-business-to-consumer) integrated logistics network in Australia. With the recent acquisition of Border Express this year, the Australia business is one of the top five integrated logistics service providers in the market. He says: “Australia has been a big success story for us, making up for the postal decline, and we will continue to strengthen our position there.”
From local to global
Beyond Singapore and Australia, SingPost also has its sights set on the global e-commerce logistics market. Yik notes that SingPost has several advantages: Singapore’s connectivity to the rest of the world and the company’s membership in the Universal Postal Union (UPU), which has 192 member countries worldwide.
“Singapore is in a prime location globally, and we have very sophisticated infrastructure in our Changi Airport and port system. The hub status of Changi Airport, which has many flights coming through Singapore to other countries and so frequently, allows us to move things from anywhere in the world to anywhere else in the world, quickly, efficiently and cost-effectively.”
With the UPU member countries facilitating international deliveries, SingPost has a worldwide postal network it can leverage to stand out from its logistics competitors. “With this very natural partnership, we can provide a base service to anybody. Not many delivery companies can do this.”
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“These strengths benefit us in transhipment and last-mile deliveries. The global e-commerce market is open to us. Singapore already has a world-class port, world-class airport and world-class airline. We can also use our port, airport and location to produce a world-class logistics service.”
With SingPost being synonymous with postal deliveries in Singapore, many may underestimate the extent of its transformation thus far. Yik says: “We are proud of our brand and identity as the national post, but we have yet to adequately convey to the market that we are now less postal, more logistics and outside Singapore, too.”
“We’ve gone a long way and transformed substantially already. Suppose people can see us as a postal company and a global logistics company that’s Singapore-branded and serving Asia and the world. In that case, I think that’s something quite powerful and meaningful. The business serving Singapore can now be a global logistics player serving the world.”
About Singapore Post (SingPost)
Singapore Post (SingPost) is the foremost postal and e-commerce logistics provider in the Asia Pacific. Their services include national and international postal operations, warehousing, fulfilment, international freight forwarding and last-mile delivery, catering to customers across over 220 destinations worldwide. SingPost has over 4,900 employees headquartered in Singapore, with offices in 13 markets worldwide. Since its founding in 1858, the group has continually evolved and innovated to pioneer best-in-class integrated logistics solutions and services, ensuring every delivery matters for people and the planet. The company’s website is https://www.singpost.com
About kopi-C: the Company brew
kopi-C is a regular column by SGX Research in collaboration with Beansprout (https://growbeansprout.com), a MAS-licensed investment advisory platform that features C-level executives of leading companies listed on the Singapore Exchange S68 . These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations
