SingPost uses technology in shift to logistics

It is banking on e-commerce to drive its logistics unit, which accounts for 69% of revenue.

Singapore Post Ltd (SingPost) is shifting its focus to e-commerce and logistics as demand for traditional mail continues to decline.

Domestic letter volumes fell to 260 million in 2022 amid a global coronavirus pandemic, from about 490 million letters in 2015, Li Yu, CEO for SingPost’s international business, told Singapore Business Review.

“The group thus strategically shifted our focus to logistics, in line with our belief of staying adaptive to market dynamics and harnessing emerging trends,” he said.

Logistics accounted for 69% of SingPost’s revenue for the fiscal year ended March 2024, or $1.17b out of a total $1.69b, according to a statement posted on its website. The group’s full-year net profit more than doubled to $81.5m from a year earlier, even as revenue fell to $1.69b from $1.87b due to lower sea freight revenue.

“By orienting ourselves to capitalise on the [e-commerce logistics] sector’s growth, we are aiming to create market leadership to generate long-term shareholder value,” Yu said. “Our transformation will position us well to scale our logistics ambitions and deliver sustainable growth.”

Global e-commerce sales rose to US$5.8t in 2023 from US$3.4t in 2019, just before the COVID-19 pandemic, and is likely to hit US$8t by 2027, according to Statista.

“With such a large and growing opportunity, this expansion isn’t just about value,” Yu said. “It reflects changing consumer behaviour. As more people buy diverse products online through various channels, supply chains have to adapt.” 

In the shift toward becoming a logistics-centric company, SingPost has partnered with postal services globally, such as Lithuania Post and Kazakhstan’s QazPost, to extend its reach into the Baltics and Middle Corridor, respectively.

Last  year, it bought Border Express, Australia's sixth-biggest pallet and parcel distribution operator, through unit Freight Management Holdings Pty Ltd, to build its presence there. “Revenues generated overseas now contribute over 85% of our total revenue,” Yu said.

Beyond expanding its network, the group has strengthened its logistics capabilities by offering return management and customised delivery options, which Yu said have become common.

An easy return policy for unwanted products is a big plus for consumers, and it is important to offer the service to online sellers, Yu said. “That may be a firm factor behind consumers’ buying decisions.”

Technology-driven

The company has also expanded its courier delivery services to include pick-up and drop-off points and real-time tracking, not only in Singapore but in its other markets.

Having these points helps strengthen SingPost International’s reverse logistics capabilities and return management, which are keys to a successful shift to e-commerce, the CEO said. Technology has also been a key lever for the company’s transition, he added.

Having these points helps strengthen SingPost International’s reverse logistics capabilities and return management, which are keys to a successful shift to e-commerce, the CEO said. Technology has also been a key lever for the company’s transition, he added.

SingPost has invested in optimisation algorithms, Internet of Things-enabled tracking systems, and data analytics using generative artificial intelligence (genAI), which all help optimise SingPost International’s delivery routes. The company also uses Document AI to convert handwritten data into structured formats, reducing human error.

SingPost’s digital transformation efforts are as much about investing in its people as they are about advancing technology.

To help employees better understand the applications of the technologies that SingPost International has invested in, the company launched a digital upskilling initiative called “Future of Work.”

“This ongoing skill upgrading program at SingPost aims to enhance employees’ proficiency in services and projects within their respective roles,” Yu said.

The company is upskilling its workers and leveraging technology to improve the way they work to support SingPost’s transformation into a technology-driven logistics enterprise, he added.

SingPost has more than 4,900 employees and serves customers in more than 220 global destinations. It has offices in 14 markets worldwide.