Postal operators in Europe and Asia are linking up with leading Chinese players to profit from fast growth in e-commerce exports from China, according to top executives.
This cooperation approach is also helping Posts to transform into logistics-based companies to compensate for falling mail volumes, they said at the recent European Post & Parcel Services conference in Amsterdam, organised by Marketforce.
In Europe, Estonia’s Omniva increased revenues by 27% to €96 million last year thanks to strong growth in parcels and e-commerce, Ansi Arumeel, board member in charge of e-commerce and logistics, said.
The group now generates only one third of its revenues from mail, following a 75% slump in volumes in the last three years alone, one third from its expanding parcels business in the Baltics and as much as one third from its new joint venture with China’s SF Express for China – Europe parcels. Omniva handled seven million parcels last year in its Baltic network and a total of 50 million parcels globally, including from China.
“Letter mail has basically gone for us. We have turned around the company to be a parcels company,” Arumeel said. “Parcels have doubled in the last few years. This change has been really fast for us.”
In the Baltics, Omniva is rolling out a large network of self-service lockers, and is looking at installing different sized lockers for different locations. In addition, he disclosed, “we want to open up our network to other carriers”. The group has also invested in a start-up payments firm to broaden its service portfolio, he added.
On the joint venture partnership with SF Express, launched in 2015, Arumeel explained that volumes “are growing and growing”, doubling last year to more than 40 million parcels destined for more than 80 countries in Europe and beyond. “Although we’re small, we can participate in global flows,” he declared.
“We have created a new way of getting parcels from China to our region,” the Omniva executive said. “It’s proved successful and we can use this system to make it much bigger. We can improve delivery times significantly.” The joint venture, branded Post11, has reduced transit times to 7-8 days compared to much longer through the traditional postal network.
In response to questions from CEP-Research, Arumeel explained that SF Express is responsible for transporting the Chinese export shipments to Europe, using charter flights with different cargo airlines. For its part, Omniva contracts transport and delivery within Europe from a range of carriers.
In addition, the Estonian group is cooperating with Alibaba for some logistics flows from Hong Kong to Europe, and is now operating terminals in London, Frankfurt and Tallinn, he revealed. Arumeel said some Chinese companies are even moving stock to Europe to enable faster delivery across the continent.
In Asia, Singapore Post has taken a different approach by investing heavily in acquisitions to build up a broadly-based e-commerce logistics network that aims to offer a full range of e-commerce services to retailers seeking to expand in the region’s emerging markets. Alibaba Group has taken a minority stake in SingPost and is seeking to cooperate closely as it expands across Asia.
Marcelo Wesseler, CEO of the group’s SP eCommerce unit, highlighted the very low 1% penetration rate of online sales in the ASEAN region compared to 15% in South Korean, 9% in China and 6% in Australia. “That’s why we decided to invest heavily in e-commerce,” he explained. But he also admitted: “In addition, we saw a big threat to our parcels business from Amazon. So it was also a defensive move.”
SingPost tried to run e-commerce marketplaces and own brands but had settled on a strategy of operating websites for existing brands and retailers, he said. This includes ‘white label’ websites for Australia Post, New Zealand Post and Portugal’s CTT, enabling consumers in those countries to order online from US e-retailers by giving them a US shipping address to use if retailers do not ship to their home country.
Overall, SP eCommerce’s volumes have soared, and its revenues more than doubled to S$81.1 million in the nine months ending December 2016. The unit now operates 50 logistics centres, mostly in Asia but also in the US, and offers end-to-end eCommerce services, including websites and customer service through to warehousing and delivery.
