Coronavirus-hit courier services players seek govt help

By Doreenn Leong

THE country’s postal and courier services segment is also affected by the severe impact of the Covid-19 outbreak on the businesses as the global economy grinds to a halt to prevent the spread of the coronavirus.

Players in the courier services segment have seen a drop of between 40% and 60% in terms of revenue as demand falls.

“Local shipments have dropped by 70%; we are now mostly depending on China and e-commerce shipments,” Association of Malaysian Express Carriers (Amec) president Bernad Yeoh told FocusM.

According to GD Express Carrier Bhd (GDex) managing director/group CEO Teong Teck Lean, its business has been affected as it provides solutions in the business-to-business (B2B) segment and has over 60,000 corporate clients providing end-to-end solutions.

“Covid-19 has affected our business and we expect a big drop in sales moving forward. To mitigate the impact, the company has put in place stringent cost management, and improved its processes. The current situation also allows the company a chance to relook its current processes and improve on them,” he told FocusM.

He added that some of its B2B customers are fast switching to e-commerce now to ensure their businesses are not badly affected.

Likewise, RHB Research believed the onset of Covid-19 is expected to have an impact across its core businesses but continued to expect Pos Malaysia Bhd to register turnaround in its earnings in the financial year ending Dec 31, 2020, given the recent plunge in fuel prices, which are seen as mitigating a fall-off in non-postal revenue over the near term. The company has recently changed its financial year end to Dec 31 from March 31 previously.

The research house maintained a buy recommendation for the counter, lowering its target price to 75 sen from RM1.70 previously.

For the nine months ended Dec 31, 2019, Pos Malaysia’s net loss widened to RM215.6 mil from RM24.6 mil a year ago on the back of lower revenue of RM1.7 bil versus RM1.8 bil.

“We expect Pos Malaysia to register a sluggish 1H20 on the protracted Covid-19 pandemic, which has disrupted e-commerce cross-border shipments and regional air travel. That, coupled with the government’s MCO, is seen as directly impacting its postal services, courier and aviation operations. Conversely, the impact should be softened by the near-term plunge in fuel costs.

Amec’s Yeoh said all its members are still operating under essential services with minimal customer service personnel while administrative staff are working from home.

“Most of our members are cutting cost by minimising headcount – hopefully no retrenchment. Our main concerns are office and warehouse rentals,” he added.

While e-commerce shipments are seeing a surge in demand due to the Movement Control Order, Yeoh pointed out that not all couriers are doing e-commerce shipments as this is operated by only a few major players.

Like most industries suffering from the Covid-19 outbreak, Yeoh said, the courier services players are in need of the government’s help, and the association has put forth its proposal to the Malaysian Communications and Multimedia Commission (MCMC), which regulates the communications and multimedia industry including postal and courier services.

“The Covid-19 outbreak is affecting supply chains worldwide. The previous shutdown of many Chinese manufacturing facilities will lead to a significant supply shortage for the upcoming immediate few months.

“And the MCO is affecting courier service operations badly. The courier operator will record lower revenue as less logistical need is required due to out-of-stock status of the e-commerce products,” Yeoh said.

The proposals being put forth include for the government to allow or require tenants to provide a 50% reduction of all rental for its premises. For example, currently the courier service operators have to pay rental for 99 owned branches.

Amec also asked the government to subsidise part of the companies’ wage cost. For example, RM500 per employee per month could be paid to the company directly to retain its employees.

It also wants the government to provide a rebate of 50% for business trading licence, as well as to exempt companies from contributing to the Employees Provident Fund, Human Resource Development Fund and Employment Insurance System for six months.

In addition, Amec wants the government to allow companies to waive paying salary of between 5% and 20% of staff total salary for up to six months.

“We could not request the employee to resign immediately, so we need a waiver temporarily until the situation gets better. For example, the waiver can vary as follows: RM2,000 to RM3,000 reduce by 5%, RM3,000 to RM4,000 reduce by 10%, RM4,000 to RM6,000 reduce by 15% and above RM6,000 reduce by 20%.

“The government should also provide a rebate of 70% on annual road tax for commercial vehicles. We have thousands of commercial vehicles operating for the essential item delivery nationwide,” Amec said.

As a longer-term initiative, Amec proposed for the government to waive any tax that companies have to pay for the year of assessment 2020. – March 27, 2020

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