By Doreenn Leong
THE current situation for the courier express players is looking grim. The big boys have seen their financial performance being badly affected by the entry of new players which has disrupted the already crowded market. The onslaught of the Covid-19 pandemic has worsened the situation further.
According to Association of Malaysian Express Carriers (Amec) president Bernard Yeoh, players in the courier services segment, in particular, have seen a drop of between 40% and 60% in terms of revenue as demand falls.
Now that more economies are slowly easing their movement restrictions, these players will see an uptick due to pent-up demand.
That said, the situation for courier express companies is not likely to be much better off as they still have to contend with the stiff competition in the market.
As of November 2019, the Malaysian Communications and Multimedia Commission (MCMC) had registered 116 licensed delivery and logistics providers, mainly consisting of privately owned entities.
These privately-owned entities are able to offer more attractive pricing, giving the big boys a run for their money.
GD Express Courier Bhd managing director/group CEO Teong Teck Lean (above) says the industry cannot sustain with new players with deep pockets killing the incumbents.
“For example, J&T Express has expanded quickly with a few hundred branches to dominate the market. It is offering 365-day services and daily working hours until 9 pm. For existing players, this would mean having to pay extra for overtime and cost will increase. This is not healthy for the industry.
“The business practice has been broken with the entry of new players. With downward pressure on postal and parcels rates, this has eroded the yield further,” he laments.
The drop in business for the big courier services players is mainly due to the entry of J&T Express Malaysia, which is touted as the nation’s fastest-growing courier express company.
In a short period, J&T Express has expanded its reach to 350 drop-points nationwide, making it more accessible to businesses and Malaysians.
Its employees work till late night with hundreds of trucks on the move 24 hours a day, transit hubs operating in rotating shifts, drop-point’s dispatchers providing parcel deliveries over the weekdays and weekends.
J&T Express had most shipments coming from the Klang Valley, Penang and Johor Bahru. It has at least 92.7% of its parcels successfully delivered within one to three days.
Based on the latest available filing on the Companies Commission of Malaysia, J&T incurred a net loss of RM59.6 mil in the financial year ended Dec 31, 2018 on the back of RM19.5 mil revenue.
The company was incorporated on Jan 10, 2018, with a paid-up capital of RM3.9 mil with its business address in KL Eco City, Kampung Haji Abdullah Hukum in Kuala Lumpur.
Its directors are Chinese nationals Fang Jie and Zeng Lingbin as well as Malaysian Tan Kar Wei. The company is wholly-owned by Winner Star Holdings Ltd.
Poorer results
Pos Malaysia Bhd recently posted its largest quarterly net loss, which is also its sixth consecutive loss-making quarter. It was dragged down by a goodwill impairment of RM90.6 mil for Pos Logistics and an aircraft redelivery cost of RM28.6 mil.
Its net loss surged to RM171.14 mil for the three months ended Dec 31, 2019 from RM13.02 mil a year ago on the back of lower revenue of RM559.58 mil versus RM581.24 mil.
For the nine months just ended, it registered a higher net loss of RM215.6 mil compared with RM24.6 mil a year ago while revenue slid to RM1.68 bil versus RM1.76 bil. On Aug 1, 2019, it announced a change of its financial year end to Dec 31 from March 31.
Meanwhile, Nationwide Express Holdings Bhd has triggered the PN17 status criteria after its loss widened to RM5.84 mil in the third quarter ended Dec 31, 2019 from RM928,000 a year ago while revenue fell 21.39% to RM14.98 mil compared with RM19.05 mil a year ago.
Based on the consolidated quarter results as at Dec 31, 2019, the shareholders’ equity of the company is below 50% of its issued share capital.
Its net loss for the nine-month period increased to RM9.67 mil from RM4.61 mil a year earlier while revenue declined to RM52.82 mil from RM56.38 mil dragged down by the courier business.
Similarly, GDex saw its net profit slashed by almost half to RM5.9 mil in the second quarter ended Dec 31, 2019 from RM10.7 mil a year ago despite posting higher revenue of RM87.4 mil versus RM82.8 mil.
Other players affected include Tiong Nam Logistics Holdings Bhd and Tasco Bhd which saw their net profit being dragged down by stiff competition.
Freeze on licences
According to GDex’s Teong, there is an urgency to look at the industry to expedite recovery of the sector.
“The industry is in a precarious situation. It used to be a darling industry but has now become a toxic industry. What the government can do is impose minimum pricing for the courier business as part of the licencing conditions. For instance, banks are bound by the base lending rate, which is the minimum rate for banks.
“There should be a freeze on the licences to be issued, limit the players as there is already a saturated market with over 100 players,” he said.
He added that the authority concerned, MCMC, has given its approval for a forum registered as ‘Portal Forum’ to be set up which can address the grouses of industry players and consumers as well.
This is similar to those in the telecommunications industry where a forum was set up to regulate the industry. – May 12, 2020
