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OPTIMIZATION OF COURIER SERVICES IN THE LOGISTIC CHAIN

By Mohan Ramasamy. OPTIMIZATION OF COURIER SERVICES IN THE LOGISTIC CHAIN. OUTLINE. AN OVERVIEW MAJOR ISSUES OPTIMIZATION POSSIBLE SOLUTIONS. AN OVERVIEW.

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OPTIMIZATION OF COURIER SERVICES IN THE LOGISTIC CHAIN

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  1. By Mohan Ramasamy OPTIMIZATION OF COURIER SERVICES IN THE LOGISTIC CHAIN

  2. OUTLINE AN OVERVIEW MAJOR ISSUES OPTIMIZATION POSSIBLE SOLUTIONS

  3. AN OVERVIEW In the 60’s and 70’s, courier service industry was dominated by foreign players. Late 70’s witnessed the home grown companies entering the market. Last 30 years, they have all expanded and grown in terms of business as well as services. Today most have the ability to offer a total logistic solution comparable globally. However there lies inherent problem that continue to persist and retard its growth further, especially so, for local based players.

  4. Continued….. The courier service industry in Malaysia, is a RM 2 Billion industry and continues to grow (source Association of Courier Services – 2005) Foreign players dominate approximately 60% of market share To date there are about 140 local players competing for the balance 40% (source Kwong Wah Yit Poh – 2007) They have evolved from a traditional Express Service provider into a Total Logistic Solution provider

  5. Continued….. Services Provided - Generic Express Domestic Express International Supply Chain Management Air Freight Sea Freight Warehousing Corporate Mail Room Services Total Logistic Solution

  6. MAJOR ISSUES Pricing Network Coverage Investment Strength

  7. 1) PRICING On going price war Due to open market concept Price is neither controlled nor regulated by Government Competition amongst foreign players Competition amongst local players Competition between local and foreign players

  8. 2) Network Coverage Basically the strength lies in the extensive coverage of the service provider. Foreign based companies dominate international air freight routes as well as overland routes Local based companies have limitation in air freight routes but have an advantage in overland routes

  9. 3) Investment Strength FedEx Express Facts Headquarters - Worldwide Offices Service Area - 220 countries Workforce worldwide - 140,000 employees Volume - 3.3 million packages daily Air Fleet - 677 aircraft Ground Fleet - 44,000 vehicles (source FeDex official website – 2007)

  10. Continued….. Local based company facts Headquarters - Kuala Lumpur Service Area - 110 Domestic Offices and 10 International Office Employee Strength - 1,400 Volume - 20,000 Packages Daily Ground Fleet - 550 Vehicles Air Fleet - NONE (Interdependent on others) (source Google Courier Search-2007)

  11. OPTIMIZATION • PRICING • 60% of the market share of RM2 Billion is contributed by MNC which engage foreign base players to service • Mindset and perception change should be initiated to give local based companies an opportunity to service MNC • Local based players rates are competitive to foreign based ones

  12. OPTIMIZATION

  13. OPTIMIZATION NETWORK COVERAGE Both local and international companies use domestic service provider for remote areas Local companies engage international companies to service major cities And vice versa Again mind-set change should be initiated to encourage usage of local service providers

  14. OPTIMIZATION INVESTMENT STRENGHT A radical approach would be to encourage merger amongst the 2nd tier local players Consolidation of their joint resources would strengthen them akin to the banking industry merger A more stable and controlled fuel price by the government

  15. OTHER POSSIBLE SOLUTION Training modules tailored for the industry – skill enhancement Tax relief for vehicle purchase Formulation and incorporation of policies to encourage MNCs to use local service providers

  16. THANK YOU THE PLAYERS

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