Parcelling out logistics

Parcelling out logistics

Thailand Post plans a digital transformation, cutting bureaucracy and adding services to compete in the package delivery business

Mr Korkij and all staff are making an effort to keep Thailand Post as one of the top three players in the country's package delivery market.
Mr Korkij and all staff are making an effort to keep Thailand Post as one of the top three players in the country's package delivery market.

Competition in the country's parcel delivery business is not merely a red ocean market, it's bright red as China-based delivery companies parade into the 66-billion-baht market with massive investment to combat their rivals.

Thailand Post Co, despite its pedigree for providing mail and postcard delivery as well as money order services, is now thriving in parcel delivery, with this segment contributing 50% of annual revenue.

Thailand Post stands in the top three for parcel delivery in the country and its management wants to stay competitive in this market by adopting digital transformation and exploring new related businesses by leveraging its assets.

The company aims to make the organisation lean and create a new revenue stream.

"We don't see this as merely parcel delivery service, but a whole service ecosystem. It is part of our responsibility to provide communication services to Thais," Korkij Danchaivichit, chief executive of Thailand Post, told the Bangkok Post.


Throughout 136 years of operation, Thailand Post, previously known as the Department of Post and Telegraph, has played a crucial role in postal services for Thais offering mail, postcards and money orders.

The parcel delivery service began about a decade ago to fill space on transport vehicles and in response to customer demand.

"We must keep the company competitive in the parcel delivery service as long as we can," Mr Korkij said, noting this is a mission of the company's staff and management.

Management is monitoring the provincial markets, looking for flexible policies to stay competitive in this segment.

The company has around 40,000 staff and 5,000 post offices. Half of the staff work on mail and parcel delivery services.

Its strength lies in last-mile connections with people and consumer trust among Thais who have used its services for decades.

However, Thailand Post's weakness is seen as low agility, bureaucratic operations and a bulky structure unsuitable for digitally-driven management.

Thailand Post's management structure is divided into five departments: operations; digital work; business; strategy and support, which includes human resources; and finance.

Operations is the largest department with around 18,000 staff.

Mr Korkij said the company's structure needs to trim some unnecessary levels or operations to cope with the market competition.

There is room for improvement in the company's bureaucratic culture as it gears up for digitalisation, he said.

"I want to see a lean company with reduced costs, that is more agile and digitally transformed," said Mr Korkij.

An example of its clunky rules established decades ago is the process to lay off one employee, which may take 150 days to complete, he said. To establish or shut offices, it requires approval by the Postal Affairs Committee.

Private companies are much more nimble, said Mr Korkij.

Thailand Post's rivals, especially Chinese firms, are ready to invest huge sums to expand offices or may resort to price dumping in the market, he said.

"Thailand Post has no policy to follow suit. We will maintain service quality and provide reasonable prices to customers," said Mr Korkij.

Thailand Post is keeping a close eye on the parcel delivery market in provinces to maintain its competitiveness.


Thailand Post plans to launch new services, adding value to its existing assets and improving Thais' quality of life.

The company's subsidiary THP Distribution plans to launch "Pool Space" parcel delivery platform next year, allowing people to use their own vehicles to deliver parcels as a freelance job, he said.

Drivers have to sign up for the system to send packages. No fees are collected from them in the first 3-5 years.

Delivery fees, which will be collected from parcel receivers, will be set as a benchmark by THP Distribution.

THP Distribution also plans to roll out an e-wallet service to accommodate transactions and will collect a 4% fee from each transaction.

Thailand Post wants to sell insurance products to participants in Pool Space as another revenue stream.

Thailand Post has selected an advisory firm for the project, with details to be revealed in a few months.

"We are not focused on making profits from Pool Space. We want it to serve Thais and explore a new business under the digital economy," said Mr Korkij.

Thailand Post wants to set up another subsidiary to operate a retail business similar to convenience stores, available at all 5,000 post offices nationwide.

Talks have been held with giant retail players, such as CP All, Central Group and Big C, for such cooperation, he said.

The company also entered into a memorandum of understanding with Krungthai Bank last month to develop a digital platform where farmers can directly contact customers. Thailand Post will benefit from delivery of products sent by farmers.

"Parcel delivery competition is not just a red ocean market, it is extremely red," Mr Korkij said. "One way to stay competitive is to expand services on our existing assets."

Thailand Post has enhanced its services by offering same-day delivery. The cross belt sorter shown can handle more than 6.5 million parcels a month.


Thailand Post aims to launch smart parcel pick-up boxes to cater to the delivery business by mid-2021, with a plan to roll out 30,000 boxes in the first three years.

These smart lockers will serve the new digital lifestyle of customers who want to use the service around the clock, including patients picking up medicine sent by hospitals.

The lockers are powered by electricity and could have a temperature control system, he said. Users need to download a mobile application to use it.

The project could cost 1 billion baht, said Mr Korkij.

Thailand Post delivers medicines from hospitals to patients now with specially designed parcel boxes, a service that generates 10 million baht per month.

Demand for such service keeps growing, particularly for medicines that need temperature control, he said.

The company also plans to install an Internet of Things-embedded system at 22,000 post boxes across the country by 2023. The first batch of 1,000 is expected to be completed by the end of this year.

The system should help reduce management costs for staff as mail and postcard delivery via post boxes is diminishing.

Mr Korkij said digital service now generates less than 1% of the company's total revenue per year. It is important for the firm to develop this service to capitalise on digitally-driven activities, he said.

Thailand Post serves as the sole authorised agency under the Postal Act to guarantee the authenticity of digital mail and documents. This niche could serve as the foothold of the company's digital service, said Mr Korkij.

Emails and digital documents are used daily by companies and individuals, but their authenticity and origins are sometimes questionable, leading to legal disputes, he said.


Fierce competition in the parcel delivery market has led to aggressive approaches from foreign players, such as price dumping promotions to court customers, said Mr Korkij.

Customers can sometimes be confused about companies' claims of fast, quality services, he said. Disputes may arise between couriers and customers when parcels are damaged.

All these issues may require an industry regulator as more players enter the market, Mr Korkij said.

The parcel delivery players should form an association to draft an industry regulatory framework for proposal to related agencies for consideration, he said.

"This move is critical because if the industry is uncontrollable, it would have a bad effect on parties," said Mr Korkij.

He suggested Sweden as a model, with its regulatory body for postal and delivery services also serving as the sole regulator for telecom and broadcasting business.

"In Thailand the government should extend the responsibility of the National Broadcasting and Telecommunications Commission to add postal and delivery services," said Mr Korkij.

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