Delivering success

Delivering success

Photo: Somchai Poomlard
Photo: Somchai Poomlard

Asia's first driverless trucks began operating in October at the ExxonMobil plant on Jurong Island in Singapore, while fleets of autonomous delivery vehicles are expected to get rolling on Great Britain's motorways next year. These are just some of the headline-making developments in the brave new world of transport being promoted by the likes of Google, Tesla, Uber and major vehicle manufacturers.

But if you want to move a small parcel from Point A to Point B, when A is a warehouse in Bang Na and B is a shophouse in a narrow soi in central Bangkok, a high-tech robo-car will not be the answer anytime soon.

That's why Alex Ng believes that his human staff are simply irreplaceable. They have to be well taken care of if companies want the best out of them, says the executive director of Kerry Express, the Thailand-born and Hong Kong-based specialist in next-day delivery.

"When you run this business in Thailand or in Southeast Asia, algorithms or automation do not matter. What matters is to make sure that the drivers and couriers enjoy working here," Mr Ng told Asia Focus. "If you have people who enjoy their work and you can turn their intelligence on, that is the best algorithm today."

People, especially in Southeast Asia, will not work for you if "you do not manage them well", said the 38-year-old executive, noting that he has seen many instances of senior executives making things harder for their subordinates, which makes the latter less efficient. Those are experiences that he does not want to repeat with the people who look to him for leadership.

"Our management style at Kerry Express Thailand is for the seniors to order less than more," he said. "Sometimes we do not even ask questions because there is no golden rule that a senior needs to be smarter than a junior. In our company, we believe that juniors are smarter than seniors.

"Seniors have access to better resources than juniors, so our job as seniors in this company is to channel our resources to the juniors to help them attain direction easier. We basically manage by results, not processes."

To make people happy when they are working for you, he said, it helps if bosses refrain from pointing fingers, hold fewer meetings, and talk more about results while at the same time giving employees the room and resources to grow with training.

The "stupid boss principle" and "office politics is a sin" are two of the guiding principles in the offices of Kerry Express, which also strives to make its drivers happier by paying them higher than the market and offering incentive programmes.

Kerry Express has been in Thailand for 11 years, with its main focus on parcel express delivery, mostly items in boxes or packages that weigh less than 30 kilogrammes. Express delivery means the parcels are collected today and will be delivered to anywhere in Thailand within the next day.

For the first seven years of its existence, the company focused on serving corporate clients, offices and chain-store delivery customers. But as e-commerce began to really take off in the country in 2012, it became one of the pioneers of delivery service for e-commerce websites. This was just a few months before Mr Ng joined the business.

The Thai operation is part of Kerry Logistics Network which in turn is part of the larger Kerry Group based in Central, Hong Kong. Founded in 1981, Kerry Logistics today manages 4.3 million square metres of logistics facilities, 8,100 self-owned vehicles and more than 700 service locations worldwide.

Kerry Express started with 20 trucks from Hong Kong and collected five boxes on its first day of operations in 2006. Today it has more than 500 distribution centres in Thailand and a fleet of trucks that deliver around half a million parcels every day.

Mr Ng has been with the Kerry Group since 2001. Back then, he was a new graduate weighing three job offers: from a bank, one of the big four global accounting firms, and Kerry Logistics. At the time he had no experience in logistics whatsoever.

"I didn't want to wait behind a long queue in a bank or an accounting firm for promotion and hierarchy, so I decided to join the management at Kerry Logistics which was a very new company in Hong Kong at the time," he said.

"I went through one year of training -- driving forklift trucks, sorting cargoes, picking goods, typing, shipping, documenting, picking up customer calls -- and eventually helped with the acquisition of our first office in China, in Shanghai."

He stayed with Kerry Logistics in China from 2003-08 before he started the fashion and lifestyle department, serving big clients such as Calvin Klein and Louis Vuitton, and became one of the youngest general managers in the Kerry Group.

In 2008, he was asked to move to Thailand to once again start something new for the company. Managing KART, Kerry's cross-border trucking unit in Asean, gave him the opportunity to absorb knowledge about the region's logistical needs. In 2013, he volunteered to head Kerry Express.

"We were very small when I joined until we saw the e-commerce trend coming and now we have grown from 200 people to more than 6,000 employees," he said.

Thailand's biggest cash-on-delivery (COD) operator, Kerry Express also has a presence in Hong Kong, Taiwan, Vietnam, Cambodia and Malaysia. Before it started serving e-commerce clients in 2012, the company was delivering between 15,000 and 20,000 parcels per day. Now it is delivering more than double that amount for all the big names including Lazada, Zalora and Shopee.

"[The number of parcels being delivered] has grown exponentially. We used the first six years to build from scratch to 100,000 parcels per day. The past few years (since the e-commerce boom), we grew ourselves to half a million per day," Mr Ng said.

In terms of diversification, Kerry Express has expanded from its pure business-to-business (B2B) origins that involved deliveries to offices and business locations only. Now it delivers to everyone, with the business-to-consumer (B2C) side experiencing robust growth from e-commerce.

The company also inaugurated a business-to-consumer (C2C) business in 2013 and has now expanded it to include service points at eight BTS stations and parcel lockers in more than 70 business or residential locations in Bangkok.

"Kerry Express was Thailand's first express company and the first to link up all provinces with our next-day service," said Mr Ng. "We are extremely fast and reliable and we have extended coverage where if you give us 100 parcels to deliver, 97 of them will arrive within the time you expected in the first attempt, with a return rate of less than 1%.

"We are also the country's biggest payment-on-delivery operator as we were the first to offer such service."

The company puts a lot of effort into making the customer experience as pleasant and friction-free as possible, which has involved recruiting hundreds of people at its call centre to deal with parcel tracking, inquiries and complaints about damaged parcels or late delivery.

It also goes the extra mile when it comes to ensuring that the people who meet the customers on the front lines are happy.

"We train our drivers every month and we have a full-time standalone training unit and regional teams to try and make sure that their job is easier, because if you do not pay them well and you make their job more complicated, they will move on," he said.

Smartphones are distributed to all drivers while electronic signature and payment systems are standard in every truck.

"Around 80% of our employees are grassroots people and to you 200 baht might be a little but for them it is a lot, so we do not have silly policies like cutting off overtime or cutting money here and there. We've taken years to develop such a system and we respect all of our drivers very much."

'PRIDE OF THAILAND'

Kerry Express was started by Robert Turner, a Briton who had been a regional managing director for FedEx. He had observed that Thailand did not have an express company at the time, so he proposed to Kerry Logistics in 2006 that it enter the market in the Kingdom, and the rest is history.

"We started quite casually and the operation was very small at the start," Mr Ng said.

Despite being a Hong Kong company, Kerry Express is the "pride of Thailand" because a lot of the protocols, processes, mobile apps, programmes and personnel originated in the Kingdom before being exported back to Hong Kong, he explained.

"Kerry Express Hong Kong inherited the system we developed in Thailand. We also inherited the app that we are using in Thailand but with some variation since express in Hong Kong and Thailand means totally different things.

"In Thailand, express means within the next day. In Hong Kong, next day is slow, it is not express, and Singapore will be the same," he said, referring to the company's plan to expand into the city-state next year. Indonesia is also in the pipeline.

Malaysia, where the company is already operating, is similar to Thailand but not identical, since real next-day delivery is harder to archive given the country's geography that includes part of the island of Borneo. In terms of parcel sizes, the boxes are usually bigger in Taiwan because of the proliferation of small and medium enterprises (SMEs) there, which require more bulk deliveries when compared with smaller boxes Thailand.

"Document, parcel and express deliveries in Malaysia are quite segregated and even more so in Thailand, but in Taiwan they mix everything together, so express delivery is only the definition of the mode of movement. There is no clear-cut definition for express because it depends on the constraints in each country," said Mr Ng.

Indonesia will be "challenging", he said, because of the 17,000 islands which require more air delivery. The need to involve airline partners will reduce margins, so there will be another mode of competition.

"We will not compromise on quality in exchange for rapid growth," Mr Ng said of the company's expansion plan for Indonesia. "We will never trade off our name so we will start with very reliable services in limited areas first. We want to be experts on certain routes including in Jakarta, Sumatra and Java before expanding further."

Mr Ng believes that for a delivery business, Kerry Express is more like a network builder since it has to build up a highly reliable infrastructure before it can operate. It does not define itself as a transport or trucking company because a trucking company does not need all the infrastructure that an express company would needed, he said.

"The infrastructure includes your offices, your line-haul network, your delivery fleet and most importantly, your people, all of which need to move up to certain scale first before you can build up the service. All this infrastructure building takes time and money but the only thing that cannot be bought by money is people."

Each parcel delivered from a sender to a recipient will have to pass through six or seven pairs of hands, so that means finding seven reliable people to handle all aspects of delivery, and in Southeast Asia, the biggest challenge is finding the right talent.

"Southeast Asians do not speak the same language, they do not have the same cultures, and there are very different labour and investment laws, so adapting to each market is our challenge, but our biggest challenge is people," he said.

PEOPLE VS MACHINES

Can some or all of those seven reliable pairs of hands be replaced by machines? "I don't think so," is the answer Mr Ng gives.

"The process of delivering a parcel could be eliminated or simplified from six or seven people down to five or six people, and given the labour costs in the region today, the tradeoff between mistakes, accuracy, investment and human cost, full automation does not make sense," he added.

Nevertheless, Kerry Express is investing heavily in automation where it can be helpful, such as auto-sorting systems, sensors and auto-scanning, but there is still a need for people to monitor progress after the parcels have moved through any automatic sorting process.

"It will be more than 10 years before machines can fully automate the process since machines and automation only work well with standard appearances and routing, but parcels come in different sizes and travel by different routes," he said.

In terms of self-driving trucks, Mr Ng believes it could be 20 years before such innovations will be applied effectively on a significant scale, because humans are still driving on the roads and it will only work when all vehicles are fully automated.

"The variations will cause huge exceptions that can be fatal," he said. "In a way this is similar to our operation, where unless packages and the whole transport chain become automated, there will still be interaction between our system and humans."

Drone delivery does not work right now because the demand does not justify the investment, in his opinion. The cost of hiring a human to hand-deliver parcels is still cheaper than developing a fleet of drones, while one drone can at most handle only one parcel at the time.

Looking back on his 17 years with the Kerry Group, Mr Ng says the reason he has stayed is because of the new challenges that the variety of the group's businesses present to him. He believes that the ever-changing nature of the logistics industry means that the company can never relax or accept things as they are.

"New technologies are opportunities and the challenge is ourselves," he said. "When we get older, I see a lot of people settling down, not only in terms of geography but also their hearts are settling down. They feel proud and they do not care about new things and development anymore. In our organisation, I think, this is a sin.

"We try to stir things up all the time at this company."

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