Keppel Logistics aims to stay relevant with e-commerce

Mr Gay says that as companies begin to re-look and evolve their supply chains, Keppel Logistics, likewise, has to adapt and grow new muscle, as well as develop new capabilities and competencies.
Mr Gay says that as companies begin to re-look and evolve their supply chains, Keppel Logistics, likewise, has to adapt and grow new muscle, as well as develop new capabilities and competencies.ST PHOTO: KEVIN LIM

Staying relevant in a fast-changing sector is a key strategy for Keppel Logistics, said chief executive Desmond Gay.

This is why the company - a wholly-owned unit of Keppel Telecommunications & Transportation - embarked on a $4.6 million acquisition of a majority stake in e-commerce logistics company Courex in October.

Mr Gay told The Straits Times recently: "We are constantly striving to innovate and evolve, and the Courex acquisition has allowed us to structure ourselves in a way that we become more relevant to the market and the new economy. It is just the first step of things to come."

Courex is a third-party logistics service provider that supports the needs of retailers, from last-mile delivery to international shipping and warehousing. It counts Singapore Airlines and Hachi.Tech among its clients.

Keppel Logistics holds a 59.6 per cent stake in Courex, while the remaining 40.4 per cent is held by founder Joe Chua, who continues to lead the company.

Mr Gay noted that the acquisition came as a "natural progression" for Keppel Logistics, as it moved to expand from its traditional B2B (business to business) business into the B2C (business to consumer) space, or the e-commerce market.

"As companies, including our customers, begin to re-look and evolve their supply chains against the backdrop of an e-commerce dominated landscape, we likewise have to adapt and grow new muscle, and develop new capabilities and competencies," he said, noting that doing so will ensure the company remains competitive.

Incorporating Courex's capabilities into Keppel Logistics' business also allows the firm to better cater to its customers, he said. This is key as more brick-and-mortar retailers turn to online platforms to complement their sales channels.

The growth prospects for e-commerce in South-east Asia are significant, Mr Gay noted.

He cited a recent study by Google and Temasek Holdings, which says e-commerce in the region is expected to soar from US$5.5 billion (S$7.8 billion) last year to about US$88 billion over the next decade, and possibly up to US$128 billion even. Singapore's e-commerce market is forecast to grow from US$1 billion to US$5.4 billion over the same period.

"Being in the middle of a region like South-east Asia, with more than 600 million people - there we have a huge market opportunity," said Mr Gay. "With the acquisition, we're only just starting, and we're ready to have a bite of the e-commerce pie."

Mr Gay expects Keppel Logistics, which has a presence in Australia, China, Indonesia, Malaysia, Singapore and Vietnam, to grow its e-commerce logistics business by at least 15 per cent in annual revenue over the next few years.

He singled out Indonesia and Vietnam as "bright spots", noting that Indonesia, in particular, is expected to make up over half the South-east Asian e-commerce market by 2025. The firm will explore opportunities to enter new markets such as Thailand, the Philippines and Myanmar.

Amid a hyper-competitive market - reports last month said the US-based Amazon is set to enter South-east Asia next year - Mr Gay is positive Keppel Logistics will be able to maintain its edge.

"A market that is US$88 billion and possibly US$128 billion is big enough, I think, for the various players," Mr Gay, said.

"If you look at South-east Asia, it's still very fragmented. This means you have specialists that provide only last-mile services, for example, or parts of the supply chain, but not quite the entire supply chain."

He added: "Our synergies with Courex will also help us move towards being an omni-channel logistics service provider, while retaining our core strengths in providing best-in-class third-party logistics solutions."

A version of this article appeared in the print edition of The Straits Times on December 12, 2016, with the headline 'Keppel Logistics aims to stay relevant with e-commerce'. Print Edition | Subscribe