With letter mail volumes falling worldwide, Singapore Post has engineered a turn to logistics to boost its profitability. Its Group Chief Financial Officer Vincent Yik explains its strategy.

When was the last time you posted a letter, bought a stamp or visited a post office? With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

“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 a great amount of pride. The postal business used to make up almost all of our revenue.  Now, about 85 per cent of revenue comes from logistics and the rest from postal.”

He adds that making the transformation enabled SingPost to significantly increase its revenue over the past five years and maintain its profitability even as mail volumes plunged by over 40 per cent from 2018 to 2023. “A significant proportion of our profitability now comes from logistics, and we are going to 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 service standards. We have the vans, the people and the distribution capacity. We have the ability to deliver to every household in Singapore. That same infrastructure can be retooled to support e-commerce deliveries.”

“In fact, we had a glimpse of this future during the Covid-19 pandemic with the surge in delivery of e-commerce volumes as well as test kits and masks to households.” Moreover, the value of Singapore’s e-commerce sector is forecast to grow from US$5.9 billion in 2021 to US$10 billion by 2026 (approximately S$8 billion to S$13.5 billion), presenting a golden opportunity.

“That projected value is far bigger than what we ever generated in Singapore. If we can get a good part of that, it will be substantial for our Singapore business.”

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, bicycles and motorcycles may not be appropriate. We do need to revamp some of our infrastructure, and we are doing that.”

Equally importantly, the company is encouraging a mindset shift among its workers. “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 must change, and the way they work must change.”

“It’s a journey to get people to see things differently and change the way they do things, but you need to be consistent until the message is ingrained. We have to sell our transformation to not only the people who have been in the company, but also those who are coming on  board and our business partners. I think we have been successful in this.”

After an eight-month-long strategic review of the Group and its portfolio of businesses, SingPost announced in March that it will 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 will be able to 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 resources and decision-making capabilities. The key imperative is that they must be profitable and meet a set return on the capital that we put in.”

In Singapore, SingPost’s plans include integrating its postal and e-commerce logistics networks into a single and efficient combined network. Yik says: “We are the only company in Singapore that goes to every address in the country every day. 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 and 3PL logistics, and first- and last-mile deliveries respectively, SingPost has been building a B2B2C integrated logistics network in Australia. With the recent acquisition of Border Express this year, the Australia business is currently one of the top five integrated logistics service providers in the market. “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 has its sights set on the global e-commerce logistics market too. 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 across the planet.

“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 a large number of 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 on 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.”

“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 make use of our port, airport and location to produce a world-class logistics service too.”

With SingPost being synonymous with postal deliveries in Singapore, some may not appreciate the breadth and depth of its transformation to date. Yik says: “We are proud of our brand and identity as the national post, but we have yet to bring across adequately 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. If people can see us as not just a postal company, but really a global logistics company that’s Singapore-branded and serving Asia, serving the world, I think that’s something quite powerful and meaningful. The business that was serving Singapore can now be a global logistics player that serves the world.”

About Singapore Post Limited (SingPost)

Singapore Post (SingPost) is a leading postal and eCommerce logistics provider in Asia Pacific.

The portfolio of businesses spans from national and international postal services to warehousing and fulfilment, international freight forwarding and last mile delivery, serving customers in more than 220 global destinations. Headquartered in Singapore, SingPost has over 4,900 employees, with offices in 13 markets worldwide. Since its inception in 1858, the Group has evolved and innovated to bring about best-in-class integrated logistics solutions and services, making every delivery count for people and 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 SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. Written by Feng Zengkun.

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