Posthaste towards tech innovation
The slow death of snail mail has posed serious challenges to Thailand Post, but the state enterprise remains confident of finding its footing in the dynamic digital landscape.
Remember the last time you sent a handwritten letter, folded it into an envelope and stuck a stamp on the top corner? Or when you stopped to check the mail and found a personal missive in your letterbox? It’s no secret that the postal business is shrinking in the age of digital communications. It seems we can be impatient, impersonal and too beholden to the speed of technology to engage in a more time-intensive human interaction.
Samorn Terdthampiboon, president of Thailand Post, concedes: “This is certainly a tough time for the state postal enterprise.”
Mail volume is at its lowest as most people send e-mails to communicate or use a private delivery service like a no-frills messenger service app or international courier to deliver packages fast, which consumers regard as more efficient than relying on a state enterprise.
But Mrs Samorn is not one for pessimism. “Like it or not, mail service is not going away anytime soon,” says the 56-year-old, who has worked at the state enterprise since its founding 14 years ago. “The postal service is not a dying industry. We’re still far from it. We can survive for a century.
“The digital revolution is bringing disruptions to our lives and industries, but it will not bring an end to Thailand Post.”
To stay alive in a rapidly changing technological landscape, Mrs Samorn says Thailand Post has optimised its operational effectiveness through the use of innovative systems and technologies and finding efficient methods to be functional in a digital era.
“We are moving towards digital service platforms to serve consumers’ connected lifestyles,” she says.
FROM RED TO BLACK
Founded in 2003 after being partially privatised, Thailand Post faced a loss of 132 million baht and was forced to enter a rehabilitation programme to keep its 33,000 employees on the job.
The turnaround was swift. After a year of being in the rehabilitation programme, Thailand Post was back in the black, all thanks to the great contributions of its employees and effective business strategies, Mrs Samorn says.
In 2016, Thailand Post reported a profit of 3.5 billion baht on consolidated revenue of 25 billion, up from a profit of 2.7 billion baht on revenue of 22 billion in 2015.
Of total revenue, 42% was derived from rising-star parcels and EMS delivery and 37% from registered mail and retail business, as well as communication services such as postcards. The rest came from delivery service to neighbouring countries.
“We project revenue of 26.9 billion baht with a net profit of 3.3 billion in 2017,” Mrs Samorn says, noting that last year’s high net profit was due to substantial
sales of high-margin postcards from the Euro 2016 football final.
“We’re a healthy state organisation with a good financial performance,” she says. “We have the foundational capabilities we need to compete with private service providers and stay ahead in a competitive market, or, if needed, to catch up with competitors.”
PARCEL DELIVERY
Revenue from Thailand Post’s parcel delivery service, including EMS (express mail service), has increased significantly, accounting for more than 40% of total revenue in 2016 after starting just five years ago.
Mrs Samorn says revenue from the parcel delivery service will exceed half of total revenue in 2019, thanks to the country’s spectacular growth of e-commerce with a compound annual growth rate of 20%.
“I believe parcel delivery service will be our core revenue generator in a decade,” she says.
While the e-commerce market is driving Thailand Post’s EMS and parcel delivery revenue, the booming market has also attracted more foreign players, leading to intense competition.
From Amazon to delivery service apps, e-commerce parcel delivery service relies on being able to send goods to customers at a cheap price.
Mrs Samorn says Thailand Post is upgrading its back office system as it strives to transform into a fully automated operation over the next few years.
“The modernisation is necessary not only to serve the booming e-commerce market,” she says. “The development is needed to create sustainable revenue streams for Thailand Post, serve consumer needs and accommodate the government’s digital economy scheme.”
MAJOR TRANSFORMATION
Thailand Post has embarked on a digital transformation drive in a quest to modernise postal and delivery services and fight back against the influx of no-frills messenger service apps, international couriers and parcel delivery service providers that are aggressively expanding their market share in Thailand.
Mrs Samorn says the state enterprise plans to spend at least 3 billion baht a year during 2016-18 on upgrading its core automation systems and distribution centres, including fleet vehicles.
Thailand Post has 3,000 post offices nationwide and a fleet of 1,000 vehicles.
Mrs Samorn says going digital is crucial in order to enhance services and maintain Thailand Post’s leadership position in the market, as well as fend off fierce competition from new foreign players.
The digital transformation programme will be carried out in five core areas: products/services, operations, infrastructure, communications and staff mentality.
The transformation is expected to conclude by 2018 after kicking off in late 2016.
To boost service innovation and suit consumers’ digital lifestyles, Thailand Post this year is going nationwide with its PromptPost service, a preregistration mobile app for high-volume deliveries, after launching the service in Bangkok and adjacent provinces last year.
PromptPost helps users reduce parcel processing time if they use the semi-automated processing counters.
Thailand Post is also improving the efficiency of its delivery process through a postal ID system after providing the service on a trial basis last year in Bangkok, Nakhon Ratchasima and Chon Buri.
Although postal ID is more complicated than the current postcode system, Mrs Samorn says the former will make it easier for Thailand Post to sort and send mail in a shorter time.
More than 7 million households have so far registered for postal ID through Thailand Post’s website as of last November, when they registered for postcards featuring portraits of the late King Bhumibol Adulyadej.
Mrs Samorn says she aims to have the postal ID system in place across the country by 2021.
Thailand Post plans to branch out with its dropbox service, called iBox, that lets customers pick up parcels at lockers in modern retail shops around the clock, instead of at the head office on Chaeng Watthana Road and some post offices in high-density urban areas.
The state enterprise is also on the verge of developing innovative applications to serve digital consumers by using technologies and digital devices to enhance the efficiency of delivery processes and systems.
“The transformation programme is expected to reduce our operating costs and increase the efficiency of our operations,” Mrs Samorn says.
Thailand Post is also gearing up for a big expansion of its cross-border trading and e-commerce services for Indochina, with an eye to becoming a leading regional player by the end of 2017.
Thailand Post has 24,000 staff nationwide and has no plans to recruit more employees.
CHALLENGES AHEAD
While it’s true that parcel volume has been surging in recent years, Mrs Samorn says the biggest issue currently facing Thailand Post has more to do with service quality management.
Like many state enterprises, Thailand Post has faced budgetary constraints when it comes to investing in advanced technologies to enhance the innovative capabilities of its services.
To compete in an advanced logistics environment in the digital era, Thailand Post must transform itself into a state-of-the-art player in the realm of digitisation to meet these challenges and serve customer demand, Mrs Samorn says.
Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly and, in the case of consumers, at low or no delivery cost.
Thailand Post, through its 3,000 post offices nationwide, handles an estimated 8 million pieces of mail and 1 million parcels a day, or 2.88 billion pieces of mail and 36 million parcels a year.
And while Mrs Samorn says Thailand Post doesn’t see damaged-product returns on a daily basis, those returns that do occur inevitably affect sentiment regarding services, along with the enterprise’s bottom line.
To address this problem and meet e-commerce growth opportunities, Thailand Post is moving towards automated parcel sorting to speed up work and ensure that packages arrive at the right place and on time.
Thailand Post is investing in automation to sort and manage outgoing parcels, redefine the quality of delivery processing services and reduce costs.
Automated sorting uses technology to do much of the processing that would otherwise be time-consuming and tedious to do by hand.
For example, automated systems can weigh, measure and certify parcels as they travel along conveyors, and the machines can print and apply labels to boxes and route them to the appropriate loading areas. Comprehensive parcel tracking is fully integrated with advanced software.
“To survive in this competitive market, we aim to offer a fully automated delivery processing service by 2020,” Mrs Samorn says.