Achieving Global Scale as a Tech-Enabled Logistics Enterprise

Li Yu, CEO – International at Singapore Post, tells Hazel King about the company’s strategic transformation plans and how it is growing to become an international eCommerce logistics player with technology at its core. This interview was first published in Parcel and Postal Technology International titled: "Global Scale"

In March 2024, Singapore Post (SingPost) concluded a strategic review of the Group, which highlighted the transformation of the company from a postal organisation to a ‘technology-driven international logistics enterprise focused on growth and sustainability’. As part of the review, five strategic objectives were set for the next three years – reorganisation of the Group; strategic management of capital; transforming urban logistics and deliveries in Singapore; achieving scale in Australia; and building tech-driven excellence to serve cross-border customers.

PPTI sat down with Li Yu, CEO – International at SingPost to discover more about the strategy and how technology is playing a crucial role in ensuring the longevity of the company.

Tell us about how SingPost’s operations have evolved and where you’re focusing your business right now.

We have a very clear and bold strategy for the next three years to complete the transformation to a full logistics operator. SingPost as a group now operates more in the logistics sector than the traditional mail and parcel sector, and this is very clearly driven by the eCommerce trends of the past few years. As a result, 70% of our S$1.9bn [US$1.4bn] revenue in FY22/23 was contributed to by logistics, compared to 38% back in 2020, and 86% of that revenue at a group level comes from international logistics. With the global market challenges around the world, we are leveraging the postal and commercial network to foster that growth and enable the three business sections – Singapore, Australia and International – to thrive and create synergy for the group.

How are you investing in your 4PL platform to capitalise on demand for cross-border eCommerce operations?

We have been doing cross-border eCommerce logistics for more than a decade now. In fact, there has been a strong focus in our business model for a long time to support eCommerce service providers and marketplaces to enable them to transfer the goods from the key export markets in the Asia-Pacific region to the rest of the world, leveraging our postal models.

We’re now focusing on the latest trend of digitalisation to create a better customer experience with partners around the world which are integrated in our 4PL platform ARRIV. The key is integration – in the past, there have been pieces of information transferred through various systems and there were a lot of redundancies. Just utilising the postal technology is not enough for us to fulfil that efficiency that customers demand. Customer behaviour has significantly changed, and the behaviour of logistics providers has changed – they want more transparency and visibility, demanding lower costs to serve but at the same time require us to provide more accurate milestones along the delivery supply chain – so a technology reboot is fundamental to the success and the future of our business model.

We launched the 4PL platform ARRIV in the last quarter of 2023, which has allowed us to start inputting a lot of the functionalities that the customer is demanding through a phased approach. We are also able to strengthen that partnership network through the connectivity enabled by the digital platform. The overarching goal is to achieve operational excellence with connectivity, better customer experience and better visibility.

We also have key priorities to enter markets outside of Asia and the 4PL platform will allow us to leverage our extensive partnerships to connect the dots and grow the ecosystem that we’re creating with that. The platform allows us to fundamentally change the way that we do business.

Which markets are you focusing on outside of Asia?

We are already operating very mature commercial lanes from Asia-Pacific exports to the USA, Latin America and Europe but Asia-Pacific is our home court, especially southeast Asia, and we are forging a very close alliance with the ASEAN logistics and postal operators. We also have a big subsidiary established in Australia – these two home markets form the fundamental foundation of the current business model.

We have always been very close to the UK/EU market and leveraging our postal licences in the UK, Belgium and the Netherlands allows us to act on behalf of many service providers. There is a lot of work being done already in those key areas, but the Middle East is an area where we’re looking for a key partnership and we have already started the groundwork last year. There are lots of things to prioritise but our ambition is to grow beyond Asia, focus on Australia and Singapore as our two home markets, but continuously grow the UK/EU market while putting in the Middle East as the part that can connect all the other dots.

How is the changing eCommerce market and the move to consumer-to-consumer influencing your business decisions?

We have been looking to the B2B and B2C markets and most of our volumes are flowing through the B2C channel today. We are creating fulfilment channels through the supply chain management side to fulfil B2B and B2C demands, and that is the model we’re running using our 4PL platform – and will continue to do so. Certainly, we’re seeing a very interesting trend in consumer-to-consumer (C2C) as well, but I would say whether its B2C or C2C, leveraging the right last-mile service providers and adopting the right technologies to serve all customers will be the key to success.

Another piece will be around how to manage returns for those C2C customers as it becomes a much stronger market in Asia-Pacific, and how to be sustainable in the long run. No matter the approach, you need to have an alternative delivery model to give end customers a way to make their own decisions on how they want the last mile to be delivered, and also give them the option for easy returns management – these will be the two key success factors. If the focus remains on eCommerce, the demand for B2C or C2C will ultimately be fulfilled by the technology enablers.

Tell us some more about your partnerships with SHEIN and Lazada – why are these businesses of interest to SingPost?

It is interesting to see the acceleration of the likes of SHEIN in the retail fast fashion industry to boost volumes. The partnership with them in Singapore allows us to provide them with new ways of completing end-to-end eCommerce last-mile logistics and allows us to introduce the cross-border service to SHEIN.

In many of our partnerships, we’re working with our clients to see if we can complete the picture of end-to-end for cross-border. We’re also hoping to offer them more value-added services such as customs clearance, last-mile fulfilment and returns management, so it is interesting to see and we’re excited about their journey with us.

For Lazada, we have been working with them on both the cross-border piece and last-mile delivery, so the MoU we signed with them at the end of 2022 was to empower the adoption of carbon efficient delivery options by consumers, small businesses, marketplace sellers, and entrepreneurs. Our goal is to help reduce the environmental impact for the first mile, last mile and reverse logistics.

Lazada agreement

SingPost and Lazada Singapore signed a Memorandum of Understanding (MOU) in December 2022 to empower the adoption of carbon efficient delivery options, with Lazada merchants and consumers able to use SingPost’s eco-friendly first-mile, last-mile and reverse options from April 2023.

SingPost is offering a more comprehensive suite of carbon efficient first-mile options, such as the POPDrop automated self-service drop off box fitted with in-built trackability and RFID technology that will enable merchants to ship with end-to-end tracking capabilities. The POPDrop, together with the existing network of POPStations, can be used by Lazada’s merchants and customers for their shipping and return needs and offer a more carbon efficient compared to doorstep collection.

Letterbox, POPStation and Parcel Santa locker delivery options have been made more readily available, giving Lazada sellers access to more drop-off points to deposit eCommerce parcels while consumers have more choices to collect parcels at their convenience.

How else are you boosting sustainability at SingPost?

As a group, we have a very aggressive target. We are aiming for net zero for Scope 1 and 2 operations in Singapore by 2030, and net zero for Scope 1, 2 and 3 globally by 2050. The current approach is mainly on the optimization of operational efficiency, minimization of wastage and adoption of renewable energy. To date, SingPost has converted about 32% of our owned delivery fleet to electric vehicles. We have a target to switch all our fleet in Singapore to electric vehicles by 2026 and we are also working on imposing internal carbon pricing to influence the investment decisions in the future, so all our business decisions for CapEx investment will require a stringent standard to be met on sustainability.

Overall, the idea of sustainable operations is in our DNA. Using the 4PL system, we are rolling out the option for all our customers to choose routing options by providing them with the most carbon footprint-friendly route, alongside the most cost efficient and fastest routing options. This will allow customers to dynamically calculate the carbon footprint if they choose that route using that vendor – so this is a digital way for us to calculate the carbon impact of the overall end-to-end supply chain and enable users to see the data and manage their delivery decisions themselves.

Digital development

SingPost launched a digital upskilling initiative in February 2023 for all Singapore-based employees to encourage the growth, development and implementation of key digital skills that support SingPost’s digital transformation journey.

As part of this initiative, useful digital tools and features were showcased including highlighting key functionalities across relevant applications and digital learning programs and resources.

To promote adoption and reinforce change within the business units, 20 digital champions were recruited across various departments in SingPost. The champions completed digital training workshops to better understand use cases and scenarios in which applications can be deployed to increase effectiveness and efficiency in work processes, and curate the use cases and scenarios into best practices and work with users in their department to adopt them. This is an ongoing skill upgrading program at SingPost that seeks to enhance employees’ proficiency in services and projects in their respective work.

How will you ensure the success of SingPost in the longer term?

The technology piece is the most important – it is the future. We are investing a significant amount of resources and time in developing the next stage of technology platforms. We’re leveraging AI to support us on efficiency, to create more productive forecasts of customer demands and to improve customer service. That will be a continual emphasis for investments in our business.

The second piece is the talent – continuous investment and developments of our people through our digital upskilling initiative [see Digital development box]. Getting our people up to speed in the digital future is going to be another key initiative driving the business forward.

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