Online retail: Logistics must go the extra mile amid Covid-19 pandemic

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Vincent Phang For The Straits Times

PublishedAug 1, 2020, 5:00 am SGT

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Covid-19 has led to a surge in e-commerce transactions. Delivering purchases is the sticking point. SingPost is reviewing its entire postal workflow for the new retail future, especially the crucial 'last mile' aspect.

The Covid-19 crisis has brought major disruptions to Singapore. As this country depends heavily on global trade and supply chains, the inability to move goods freely within and across borders due to lockdowns worldwide has posed significant challenges.

Here in South-east Asia, postal organisations have been hit by manpower challenges, service suspensions and inventory backlogs, with deliveries delayed by weeks and even months.

SingPost has been working with its postal counterparts to identify non-traditional means of delivering across borders, given the dearth of aviation connections.

But the dynamic circumstances caused by a constantly evolving situation in 200 countries on a daily basis have made the already gargantuan task even more daunting.

The Universal Postal Union’s latest report on the pandemic’s impact on global postal operations states: “International flows have been disrupted… with an increasing number of postal items ‘stranded’ in the ‘logistical no-man’s land’ between sender and receiver.”

That said, the crisis has brought about a significant uptick in e-commerce transactions for both essential and discretionary items.

Last year, Singapore’s total online retail penetration constituted less than 10 per cent of all retail transactions.

But for the last two months, data from multiple studies has consistently shown an almost threefold surge in online penetration to 17 per cent, even as total retail sales plunged 40 per cent, including figures from bricks-and-mortar stores.

SingPost experienced an unprecedented 40 per cent surge year on year in e-commerce deliveries during the same period, with our postal service responsible for delivering almost half of these volumes.

PUSHING THE NORMS

In the initial weeks, consumers focused on purchasing essential goods and groceries.

As the circuit breaker period in Singapore progressed, more discretionary purchases like fashion apparel, electronic games and appliances were made – a strong indicator of rising consumer confidence in e-commerce retail and growing acceptance that digital shopping is a worthy replacement for the physical shopping experience.

SingPost staff collecting parcels from the cross-belt sorter at the Regional eCommerce Logistics Hub in Greenwich Drive. With the pandemic bringing about a significant rise in e-commerce transactions, the logistics industry must step up to offer a better customer experience from point of sale to delivery. ST FILE PHOTO

The Covid-19 outbreak has also pushed the norms in other sectors.

SingPost launched its islandwide medicine delivery service in April, which includes the delivery of temperature-sensitive supplies that require special handling.

We have also recently been appointed by the Government to deliver high-security items such as passports and identity cards.

 

 

The acceptance of delivery services by medical and security agencies represents a breakthrough for the logistics industry, and highlights the latent appetite for e-commerce and the feasibility of physical deliveries for all categories of products.

It is clear that the outbreak has had the unexpected effect of being a shot in the arm for the growth of the e-commerce sector.

It has acted as a catalyst for consumers stuck at home to adopt this more sedentary form of purchasing. This trend is likely to stay.

OBSTACLES TO OVERCOME

On the operational front, the logistics industry has had to grapple with reduced productivity from the mandatory imposition of health protocols as well as a labour crunch due to neighbouring countries’ border closures.

Pioneering technologies such as smart letter boxes that can dispense both mail and e-commerce packages securely via keyless authentication, and smart stamps that allow even basic mail to be tracked, as well as an overhaul of the entire postal workflow, are in the works, and the public will be able to experience some of these world-first technologies in the coming months.

These have translated into delivery delays across the board – an undesirable outcome, especially during these times.

More broadly, the domestic last-mile delivery sector remains highly fragmented, being heavily reliant on labour and transport.

All last-mile providers employ the same resource-and fleet-heavy operational flow: individual drivers in vans who deliver goods to homes.

It is estimated that for every 10 per cent growth in e-commerce parcels, there is an 8.3 per cent increase in fleet size. This is a significant increase in emissions and congestion if there is no structural solution in terms of aggregation.

In labour-scarce Singapore, being reliant on this operational model is also inefficient, inadequate and clearly not sustainable.

While we expect some relief from the tentative restoration of international air flights and the gradual relaxation of domestic safeguard measures, the logistics industry will need to step up if it wants to make online retail a worthy replacement for the traditional buying experience.

 

 

Logistics will need to be faster, more resilient, less subject to manpower-related challenges, and offer a better customer experience from point of sale to delivery.

Scalability and agility will be key, as well as the need to leverage technology to cater to this shift.

NATIONAL INFRASTRUCTURE NEEDED

So it is important to invest in urban infrastructure that will allow us to efficiently operate this last-mile delivery network.

The government’s nationwide parcel locker network is one example of infrastructure that will assist in making urban deliveries more seamless.

By the end of next year, all neighbourhoods will be equipped with open-access parcel lockers, providing even more incentive for shoppers to purchase online and creating a more efficient alternative to doorstep deliveries for delivery personnel.

As post – with its cost-efficiency, familiarity and prevalence – is the primary mode for the delivery of e-commerce items, SingPost has also been developing new technologies and solutions to better serve e-commerce customers.

Trackability features for the postal service were introduced last year, providing higher delivery assurances for customers while maintaining the cost-effectiveness of the mail network delivery to letter boxes.

We are reviewing our entire postal workflow to prepare for an e-commerce-driven future. This “Future of Post” project aims to revamp the decades-old national postal system to be more adept at e-commerce package deliveries.

Pioneering technologies such as smart letter boxes that can dispense both mail and e-commerce packages securely via keyless authentication, and smart stamps that allow even basic mail to be tracked, as well as an overhaul of the entire postal workflow, are in the works, and the public will be able to experience some of these world-first technologies in the coming months.

 

 

The pandemic has given a glimpse of what the future of e-commerce can be, but it has also shone a harsh spotlight on the industry’s need to re-engineer the logistics network and invest in e-commerce-friendly infrastructure.

We must create a dependable, cost-effective and reliable delivery system that can deal with high-velocity, high-assurance and high-volume deliveries nationwide.

Deputy Prime Minister Heng Swee Keat has called for all industries to relook traditional processes to meet the challenges of the post-Covid-19 world, and the logistics industry should heed this call.

Should it succeed, it can solidify Singapore’s reputation as a trusted and resilient supply chain node for global e-commerce flows.

• Vincent Phang is SingPost’s postmaster-general and CEO of postal services and Singapore.

Read the latest on the Covid-19 situation in Singapore and beyond on our dedicated site here.

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A version of this article appeared in the print edition of The Straits Times on August 01, 2020, with the headline ‘Online retail: Logistics must go the extra mile’. Print Edition | Subscribe
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