Thailand Post Distribution (THPD), a business-to-business (B2B) logistics arm of Thailand Post, is transforming its operations with the aim of becoming a fully integrated logistics solution provider within three years.
The company plans to become a national logistics infrastructure company to capture the international market, said chief executive Peera Udomkitsakul.
THPD's niche is the delivery of bulky parcels or items of a specific size through the B2B model. Its customers include companies producing electronic products, furniture manufacturers, pharmaceutical companies and hospitals.
THPD employs 1,300 people, including employees and contracted staff.
The company wants to list on the Stock Exchange of Thailand (SET), projecting it will file a listing proposal with the Securities and Exchange Commission in the fourth quarter of 2024.
THPD aims to be the first state-owned enterprise under the Digital Economy and Society Ministry to list on the SET.
Mr Peera said the adjustment of operations aligns with the transformation roadmap of its parent company.
The rejig is needed to deal with fierce competition from rivals using predatory pricing strategies, as well as to generate a new revenue stream, he said.
Orders received through Thailand Post account for around 45% of THPD's delivery business.
Mr Peera said the express delivery of medicines and medical supplies is THPD's core expertise. The healthcare sector accounts for 35-40% of the company's total delivery activities. Its delivery services within the healthcare sector involve around 1,500 hospitals nationwide.
BENEFITS OF LISTING
THPD booked total revenue of 123 million baht and net profit of 63 million baht in 2020, followed by revenue of 107 million and profit of 64 million in 2021. Last year, the company posted revenue of 81 million baht and net profit at 65 million baht.
He said the company is in the process of hiring a financial advisor for its listing plan. THPD is adjusting its operations to allow for full compliance with the SEC's listing requirements.
Dhanant Subhadrabandhu, chief executive of Thailand Post, said THPD should gain several benefits from listing.
First, the company would have access to funds to develop innovation and initiatives, possibly leading to a merger and acquisition opportunity in the long term, he said.
Second, listing on the SET should drive the company to higher standards of operational management to meet the bourse's requirements.
Third, listing offers more options for prospective partners to join forces with THPD in the future, as a listed company will have a more flexible structure better suited for joint investment, said Mr Dhanant.
COLD COMFORT
Thailand Post earlier established Fuze Post, a joint venture with JWD Info Logistics and Flash Express to provide a cold chain express service. The business aims to capitalise on the cold chain logistics market, which is valued at 34 billion baht with annual growth of 10%.
He said the Fuze Post venture offers diversification for Thailand Post.
Fuze Post might consider listing on the SET or Market for Alternative Investment in the future, said Mr Dhanant.
Fuze Post started services in September 2021 through a direct pick-up channel, gathering items for delivery then expanding to provide drop-off points. The company is expanding to serve the Asia-Pacific market.
Fuze Post's strength lies in the synergy created through its vast network of direct pick-up and drop-off channels, as well as Flash Express's digital management technology.
Thailand Post specialises in door-to-door delivery with the help of its nationwide network and several years of experience, boasting a combined workforce of more than 20,000 delivery drivers who are active in every part of the country and familiar with their communities.
DIGITAL PLATFORMS
Mr Peera said THPD has been developing digital delivery platforms and digital services, scheduled to be launched this year, as part of its expansion for logistics services.
One of the services is Prompt Send, a platform offering ride-sharing for parcel delivery aimed at helping people earn revenue by using their own vehicles. The platform can also serve One Tambon, One Product (Otop) merchants.
THPD plans to offer Prompt Send applications to people who own a vehicle and are interested in the service, forgoing the service fee for the first year, he said.
The rates for parcel delivery will be set after the service is launched, said Mr Peera.
The company also provides an e-wallet system to serve transactions related to Prompt Send.
Thailand Post has 1,000 parcel delivery trucks, while THPD has 700.
He said roughly 1,300 vehicle owners applied to participate in a trial of the Prompt Send system.
The total number of parcel delivery trucks under the Prompt Send platform is expected to reach 50,000 by the third year of operation, said Mr Peera.
Through the Prompt Send platform, vehicle owners can identify and select a parcel delivery job that matches the availability of their vehicle and the space available.
The objective of the service is not to generate a profit, but rather to serve Thai communities and explore a new business over the long term, he said.
Mr Peera said THPD has been developing a Prompt Order e-marketplace platform for wholesale merchants, especially Otop producers and farmers nationwide. The platform is expected to be available on a website and mobile app.
"Prompt Send and Prompt Order complement each other and should help Thais benefit from logistics service. This represents the social role of Thailand Post and THPD," he said.
THPD is also studying a plan to turn its existing warehouses into fully automated warehouse with robots.
Development is expected to begin in the third quarter this year.
TURNAROUND STRATEGY
Mr Dhanant said Thailand Post strengthened its fundamentals and explored new revenue streams last year.
This year the goal is to improve the efficiency of its existing services and develop digital services, such as a total document handling solution and a digital mailbox service to serve private and state agencies, he said.
Merely offering attractive service rates for parcel delivery is not enough to sustain the company over the long term, said Mr Dhanant.
Thailand Post's turnaround efforts were catalysed by optimising delivery service efficiency, seeking new revenue streams from digital services, boosting the retail capability of its distribution channels, and promoting a sustainable green logistics system.
Transport and logistics generates 47.6% of the company's total revenue, followed by the postal group (31.3%), the international service group (15.9%), the retail business group (2.78%), the financial business group (1.78%), and other business (0.66%).
He said Thailand Post needs to become a comprehensive postal and logistics service provider adopting international standards by offering four major solutions: a global cross-border service, data transport, transport solutions and network strengthening.
The logistics business is still the lifeblood of Thailand's economy, especially in the retail and e-commerce sectors. However, Thailand Post has adjusted its organisational role through the launch of the four solutions, said Mr Dhanant.
Global cross-border service solutions aim to connect Thai businesses to other parts of the world, supporting international fulfilment warehouses located in free zones, areas for e-commerce businesses, development of international warehouse projects as well as other services.
Data transport solutions utilise all the information flowing into the organisation to build and enhance services. Thailand Post wants to reduce customer complaints, including those concerning the loss of parcels, by improving the service competence through partners.
The company developed an electronic document management system (Prompt Post), an electronic time-stamping service (e-Timestamp), an identity verification (KYC) service, and uses post office space nationwide as provincial-level fulfilment service areas.
In terms of network strengthening solutions, Thailand Post is building business alliances that aim to generate mutual benefits for all organisations.
CALL FOR REGULATION
Mr Dhanant said annual revenue has been declining by more than 10% on average because of intensifying competition in the express delivery market, especially last year when several foreign players launched highly competitive pricing strategies.
Thailand Post's revenue from parcel delivery service fell by around 15% per transaction in 2022 when compared with 2021. The recent hikes in fuel prices caused the company's fuel costs to surge by 30%.
Thailand Post still holds the largest market share, around 45%, in the mail and parcel delivery market, down from more than 50% two years ago. This descent led to the company launching its turnaround roadmap, he said.
Mr Dhanant said the express delivery business in Thailand should be regulated to prevent operators from using a below-cost pricing strategy, as well as to ensure the quality of services being provided benefit the customers.
He said cut-throat competition could pose a high risk to the company as a national logistics infrastructure provider, which is also obliged to provide a social service. The company always provides basic levels of support to the public, especially during crises such as delivering medicines, medical supplies and equipment to people nationwide.
"Thailand Post urges the government to reshape the competitive landscape for the optimum benefit of the country," said Mr Dhanant.
