Much like other post offices, Singapore Post still relies on its Mail business for most of its total revenue at 58.4%. However, perhaps that’s where the similarity with other post offices ends. Even though revenue from domestic mail declined during its fiscal year first quarter ending June 30, overall mail revenue increased 7.4% to S$123.2m because of e-commerce related transhipment business which increased 23% year-over-year.
Meanwhile its logistics revenue increased 4.1% to S$97.6m for the quarter. This group includes its domestic parcel business, freight forwarding and self-storage business. It’s third reporting group, retail & e-commerce, noted revenue increased 9.7% to S$22.8m.
Overall, Singapore Post’s total revenue increased 4.8% to S$210.9m for the quarter ending June 30. Net profit was up 5.1%, but, as has been the story each quarter since the postal service announced plans to revamp its strategic focus a few years ago, expenses increased. According to Wolfgang Baier, Singapore Post’s Chief Executive Officer, “To capitalize on the growing e-commerce trends, we need to scale up our investments in logistics infrastructure in Singapore and in the region. As for our core mail business, we are investing S$100m over three years to upgrade the postal infrastructure and improve service quality and productivity in Singapore.”
Indeed, the group has made numerous service investments such as Saturday deliveries for mail packages, 24/7 call centre and upgrading post offices. It is also continuing its focus on growing its logistics network to tap into the e-commerce growth particularly in Asia-Pacific. For example, its subsidiary, Quantium Solutions expanded its network further in the Philippines and Thailand.
Not only has Singapore Post made various service investments but it was itself an investment target of Alibaba which recently took a 10.32% stake in the postal service. The two companies plan to cooperate to create an international e-commerce logistics platform and opportunities in South East Asia. Just as soon as the ink was dry on this investment, Singapore Post announced its subsidiary, Famous Holdings Pte Ltd, would acquire F.S. Mackenzie, a UK-based freight forwarder. If successful, this will be Singapore Post’s first foothold in the western European market. Singapore Post also recently announced the acquisition of Hong Kong-based The Store House, a provider of self-storage solutions.
Even though expenses continue to be problematic, Singapore Post is leading the way through its strategic focus on Singapore, Southeast Asia and the international market. Through its partnership with Alibaba Singapore Post will likely expand further into new markets and service offerings.