Kerry Express paves way for logistics firms

Kerry Express paves way for logistics firms

Company could start a trend by becoming the first parcel delivery business to list on the SET.

Kerry Express set an ambitious goal to increase its delivery-handling capacity to 3 million parcels a day by 2023.
Kerry Express set an ambitious goal to increase its delivery-handling capacity to 3 million parcels a day by 2023.

Kerry Express Thailand (KEX) became the first parcel delivery firm to launch an initial public offering (IPO) on the Stock Exchange of Thailand, making the offer last December amid strong demand for courier services in the pandemic.

Having racked up 8.4 billion baht from the IPO, the company told the Bangkok Post it is committed to creating new products as well as expanding service networks and partnerships to create a better customer experience in 2021.

According to research and consulting firm Frost & Sullivan, Kerry Express Thailand had a compounded annual growth rate of 135% for parcel volume during 2014-19.

The company had the capacity to deliver up to 1.9 million parcels a day as of September last year, up from 1.6 million by the end of 2018. The firm, which was founded in 2006, has around 25,000 employees.

Mr Ng says Kerry will explore new products and expand service networks and partnerships this year.

In the first nine months of 2020, Kerry Express booked 14.6 billion baht in sales and service revenue with a net profit of around 1 billion baht. Throughout 2019, the company raked in 19.7 billion baht in revenue with a net profit of 1.3 billion baht.

Before the IPO, chief executive Alex Ng told the Bangkok Post one of the company's objectives in listing is to make its name as "a homegrown Thai brand for logistics services".

Parent firm Hong Kong-listed Kerry Logistics Network wants Thailand to be its first destination for express parcel delivery services in Asean before expanding its reach to other countries in the region.

After the IPO, Mr Ng discussed the company's plans for this year with the Bangkok Post.

"We will go back to basics by creating great new products, expanding our service network, seeking new development and partnership opportunities, and continuing to meet higher standards for corporate governance," he said.

The company, said Mr Ng, also plans to explore new business frontiers.

"We are turning Kerry Express from a company to a corporation, and we will definitely diversify," he said.

Despite new business targets, Mr Ng said the company has one strong principle -- not losing focus on express delivery businesses, as all new investments should be connected to the core business.

Delivery services are a highly competitive market in Thailand, with price cuts often adopted to lure customers.

New players have emerged to tap into this flourishing segment, driven by the e-commerce boom.

Mr Ng said he is well aware of the competition in the segment, with many players seeking to raise funds to fight in this sphere.

"Competition is our everyday life," he said. "Kerry people are used to the competition. And we love to learn new things from our fellow competitors."

"Competition is what keeps us awake. Competition is what makes us great."

Mr Ng said the company is committed to providing better services and trying to find ways to make customers and partners "put Kerry as their No.1 priority all the time".

The company, he said, attaches importance to people, ranging from employees and partners to investors and customers.

"We believe people, people, people are the key to success in our business the past few years. At Kerry Express, we put the utmost effort into people," Mr Ng said.

Referring to the impact from the pandemic, he said the outbreak altered delivery volume patterns.

For example, it is usually low season for delivery in the second quarter, but last year deliveries boomed during the second quarter, driven by the outbreak-induced lockdown, said Mr Ng.

The volume normalised in the third and fourth quarters.

He said the company expects delivery volume to be very positive this year as the outbreak has created new habits among customers.

"We believe the growth of Kerry Express will become more positive and sustainable in the long term, as we have shown our resilience and agility during the pandemic," Mr Ng said.

According to him, the penetration of e-commerce and social commerce in Thailand is still low compared with other countries, meaning there is room to grow.

Apart from express delivery services, other affiliated services and products may be needed, which could be a promising opportunity for Kerry, said Mr Ng.

He acknowledged uncertainty in the short- and medium-term is still high because of the pandemic.

The company needs to spend more time and effort in preparing for potential upsides and downsides, Mr Ng said.

Kerry Express set an ambitious plan to reach a delivery-handling capacity of 3 million parcels a day by 2023.

"This means 50% growth of the pipelines we have today," he said.

Mr Ng expects customer demand will bounce back crucially when the pandemic subsides, as seen in Taiwan and China.

"We need to prepare so when things come fast, we can digest well," he said.

Referring to BTS Group's move to purchase big-lot shares in KEX after the IPO, he said: "it is great news for the stock as many of these shares were block-sold to BTS Group, Kerry Express's strategic partner."

"With BTS Group increasing its stake in KEX, our special relationship becomes more special."

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