Though the booming goods delivery industry has been fuelled by the rapid growth of e-commerce, not all is well in the segment, says logistics buff Kritsanapong Srisongkram.
The managing director of logistics firm V Cargo has seen the downside of what Deputy Commerce Minister Weerasak Wangsuphakijkosol has called a "rising star" business.
The latest study by the Business Development Department reiterated there are bright prospects for the goods transport and packaging service industries this year, as the pandemic encourages people to stay home and shop online.
Theoretically, logistics companies should be able to create jobs and earn higher revenue based on this trend, but fierce competition has been intensified by foreign logistics firms trying to command a greater market share in Thailand.
"I would like to unite local companies to fight together," said Mr Kritsanapong, who aims to spearhead an alliance under the fourth-party logistics (4PL) concept.
4PL refers to a firm that gathers first- and second-party logistics firms, 1PL and 2PL, to provide services covering goods management for the entire supply chain.
1PL are goods sellers with their own logistics facilities, while 2PL means logistics companies transporting goods from one place to another.
V Cargo upgraded from 2PL to 3PL by adding two warehouses to its range of services -- one in Bangkok's Lat Krabang district and the other in Ayutthaya's Wang Noi district -- to provide both warehousing and transport services.
The company's 3PL status positions it as a specific goods transport service, considered part of a blue ocean economy, but it is hoping to lead a group of logistics firms to compete with foreign rivals in a red ocean economy.
FACING GOLIATH
Local logistics companies do not have the financial or technological ability to fight large foreign firms, but they can join hands as part of a strategic response against newcomers in the Thai market, he said.
"We cannot win if we take on competitors directly," said Mr Kritsanapong.
Large e-commerce firms expanding into Thailand do not come alone, working in tandem with logistics service providers in their own countries, with the latter managing goods transport and delivery services.
This has become a traditional practice and "we are not included in their operations", he said.
"These foreign logistics firms are expanding to serve Thai e-business owners. We need to protect our market."
The problem is many logistics firms in Thailand are small and have a limited budget and technology compared with their rivals, which have large sums of money, modern know-how and expertise in transnational logistics.
These international firms are willing to experience losses in the beginning to satisfy customers and gain their loyalty, said Mr Kritsanapong.
It may not be a good idea to encourage local firms to invest more and adopt high-tech transport and warehouse management systems, as these are time-consuming tasks, he said.
"We don't necessarily need to inject a lot of money. Just pick the right partners and enter the arena together," said Mr Kritsanapong.
It is not difficult for V Cargo to form connections with local logistics firms because the company is affiliated with various transport associations, providing it opportunities to meet other members.
The 4PL alliance aims to combine the technology-based management of V Cargo with the countrywide operations of logistics colleagues, allowing the group to best serve the needs of customers.
The goal is to help companies create more jobs, especially for future projects related to the Eastern Economic Corridor scheme, without needing to make a huge investment.
He said this collaboration is easier than upgrading a logistics company to the 3PL level to be more competitive because that would require more outlay for goods storage, software and manpower.
V Cargo earned over 900 million baht last year, but "our profit margin was rather thin because we made a considerable investment", said Mr Kritsanapong, adding the company spends a lot training its workers.
CUSTOMISED SERVICE
Making the right decisions on financial issues is crucial, but according to V Cargo executives, a non-monetary motive plays a major role in adding value to their work.
The company has long sought to serve specific groups of customers and customise services to meet their demand. This path led V Cargo to enter a less competitive market where it emphasises quality rather than quantity of goods deliveries.
It started working with the Government Pharmaceutical Organization 10 years ago, delivering dialysis solutions to patients' homes. The job required intensive training of some digitally illiterate staff, including an ex-seller of phad see ew, stir-fried noodles with black soy sauce, to help them learn how to use mobile technology while delivering medicine across the country.
The company also tailored its goods delivery rate calculator for a major shopping mall owner who did not want to be charged normal service fees because he did not know the exact amount of goods that would be delivered per trip. Yet the mall owner still wanted to please his phu di kao Chidlom customers who do not want to carry goods back home.
Phu di kao Chidlom refers to mostly well-to-do shoppers who are regular visitors at his department store in Bangkok's Chidlom area.
"I always tell workers these difficult jobs suit us. Giving customers specific services allows us to stay in business for a long time because our rivals will find it hard to compete," said V Cargo deputy managing director Jamnong Srisongkram.
However, it is not easy for V Cargo to succeed in the blue ocean because it requires research and investment in novel technologies to help customers solve their problems.
While revenue drives its business, the company also values the need to keep developing new services to meet the different demands of customers.
"This sincerity in serving customers makes our business sustainable. Customers can see and feel it, and we are happy to make them happy," said executive assistant Asaree Srisongkram, referring to the satisfaction from doing work that helps people.