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Saturday, June 22, 2024

The competition for speed

By Van Ly

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The rise of e-commerce has been a boon for postal business. As the industry is projected to double its revenue to US$5 billion by 2030, some 800 enterprises in the market realize they must reduce shipping time, speed up delivery and offer competitive pricing to survive.

Last year, Vietnam’s postal and express delivery services reported VND52,300 billion in revenue, up 16% over the same period of the year earlier. According to the Ministry of Information and Communications, the number of newly-established firms in this industry expanded by 12% year-on-year.

Between 2022 and 2030, the country’s postal sector is expected to expand at an average annual rate of 24%, according to the global analysis group Allied Market Research. By 2030, the industry’s revenue would hit VND114,680 billion, or about US$5 billion.

A tech race

Businesses’ efforts to use technology have significantly impacted how the postal service operates recently. With more time and manpower saved, a company may provide faster and cheaper delivery, giving them a competitive edge in the marketplace.

In Vietnam’s postal sector, Giaohangtietkiem (GHTK) JSC is a newcomer specializing in last-mile logistics. With the goal of digitizing data and using advanced technology, the company emphasizes operational innovation practices.

Founded in 2013, GHTK accounts for around 16.44% of the industry’s total revenue. In 2022, the company recorded one billion orders and secured one million retailers nationwide. GHTK now has over 1,500 offices, 2,500 delivery trucks and 30,000 local delivery people.

The 10-year-old company saw itself as a technology firm that provided e-commerce logistics. Its customers are online retailers. The firm prioritizes speedy delivery via a vast network. In particular, market research and technology development play an important role in GHTK’s operations.

The company’s speed-based business model is powered by technology. Even with a limited foundation of a few employees and some offices, the company had its own technology director for consumer behavior research and product development from day one. Using mobile devices, the director concentrates on data standardization, procedural systemization, quality assurance and personnel and operational management. The substantial investment in technology has enabled the company to process real-time daily requests and consumer responses.

Express Delivery Services Company, known as Giao Hang Nhanh (GHN Express), is making strides to reduce delivery time. After 10 years, the firm has 1,000 trucks and 20 facilities nationwide. The automated processing system at GHN handles two million orders per day, saving 600 employees and reducing processing time from 180 to 30 minutes.

The business approach includes both the enhancement of comprehensive infrastructure and operational processes. The company offers affordable, comprehensive services to its customers and partners. With the company’s mobile app, senders could track various delivery details, including prices, estimated arrival times, cash-on-delivery rates, package conditions and even delivery persons’ information.

Over the last decade, the company’s operational backbone has been built on the triangular pillars of technology, process and network. Inside HCMC, delivery orders are expected to arrive within 24 hours, while those shipped to other provinces will be delivered in no longer than 48 hours. For each typical package, the price starts at VND15,500.

Large postal service companies are also part of the trend. Vietnam Post Corp., the Government-owned postal service, reported revenue of VND27,325 billion in 2022, with pre-tax earnings of around VND517 billion. Meanwhile, Viettel Post, a subsidiary of the military-run telecoms business Viettel, made VND21,235 billion in revenue. Its pre-tax profit was about VND390 billion.

Vietnam Post Corp. was set up in 2005, and in light of the dynamic economy, it has concluded that digital transformation is a vital way to keep up with the ever-changing market. The company’s objective is to generate between VND55,000 billion and VND60,000 billion in revenue by 2025, and enhancing operations digitally may assist them in achieving the goal.

The company has made efforts to employ technology as a strong foundation for various activities, aiming to improve work efficiency and service quality.

To shorten delivery time, the company has attempted to extend its logistics infrastructure to handle 10,000 delivery packages on an hourly basis. Based on a barcode system and image recognition technology, Vietnam Post’s system could distribute packages to post offices and warehouses at the local level. The company has developed a solution for processing orders and delivering products to customers promptly and effectively.

Vietnam Post currently has 30 systems, applications and programs in place to help with package booking, tracking and delivering, as well as supporting customer service and payment procedures. The company has also spent big on infrastructure modernization and expansion.

According to Chu Quang Hao, president and CEO of Vietnam Post, the firm recently launched a northern logistics center in Hanoi, bringing the total number of domestic centers to seven regional hubs, 700 district-level centers and 10,600 other smaller ones at the local level.
Similarly, Viettel Post improved its operations to reduce delivery time by 30% in 2022. The firm now maintains 8,200 local service offices, 40,000 employees and 105 processing centers in 63 centrally-governed provinces and cities.

According to Hoang Trung Thanh, general director of Viettel Post, the business has enhanced its technical infrastructure and computer software for optimizing business processes. The company will build domestic warehouses and revamp the workflows of around 1,500 post offices and local staff, seeking to facilitate real-time tracking and improve business efficiency.

Cooperation is the key

Postal service providers in Vietnam have been teaming up to boost efficiency, save costs and attract more customers.

Vietnam Post, for example, collaborated with government agencies on document transfer activities for public services. As part of the deal, the firm has sent up to 32 million administrative dossiers and 12.3 million citizen identity cards to locals nationwide.

Viettel Post, in partnership with the national flag carrier Vietnam Airlines, offers delivery solutions for businesses in industrial zones in the northern province of Bac Ninh. The corporation has sought to employ postal infrastructure and aviation systems for logistics services to simplify business operations.

Viettel Post provides delivery options taking around six hours from Bac Ninh Province to HCMC or Hanoi, down 50-70% compared to conventional methods. The maximum delivery time in other provinces is 24 hours.

As for international destinations, Viettel Post has five delivery routes between Vietnam and other markets, including Australia, Taiwan, South Korea, China and Japan. The delivery time is about 6-7 hours.

Given the support of Viettel Post and Vietnam Airlines, businesses in Bac Ninh Province could save costs by 30% in terms of personnel, inventory management and customs clearance. More importantly, 30% of the time will be freed up for other important tasks, as opposed to traditional ways.

Late in 2022, EMS Vietnam, also known as VNPost Express JSC, inked a partnership deal with the ride-hailing company Grab Vietnam to establish an express delivery service for urban dwellers and businesses. Depending on the offers, customers could send their packages to recipients within 30 minutes to four hours in major cities.

Through an application, users could book the delivery and then give their items to Grab riders. The service, first introduced in Hanoi, Danang and HCMC, has been expanded to 19 provinces and cities across the country in 2023.

Nonetheless, despite the long delivery time, experts have cautioned about Vietnam’s relatively high postal service fees. Domestic logistics expenses seem to be above the global average, which accounted for 21%-25% of GDP, according to a recent conference on logistics competitiveness organized by the Ministry of Industry and Trade.

Phan Xuan Dung, sales director of Ninja Van Vietnam, said the maximum delivery time in Vietnam is roughly 72 hours, compared to 48 hours for China, a nation that is 30 times larger.

Undoubtedly, the speedy delivery of goods backed by the postal service has benefited society and the economy. Based on the sharing economy model, newcomers with technological advances, an entrepreneurial spirit and high ambition have joined the market alongside well-established businesses with a well-developed network, infrastructure and intensive workforce.

As a result, businesses that stick to traditional ways lag behind more tech-savvy startups in light of the increased competition.

As new entrants join the market, the emerging trends spark fresh impetus and stimulate innovation to improve postal services. More competition in the industry may continue to spur service quality in the years to come, given businesses’ rising demand to reduce costs and maximize efficiency.

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