The ease of e-commerce has conditioned Singaporeans to get too used to buying everything from $1 household items to $10,000 watches online. After all, shopping means picking up the handphone, searching and hitting the order button. Unfortunately, what follows is usually a period of extended anticipation, as buyers wait for days and weeks for their purchases to arrive.
So common is this phenomenon that the term “pre-parcel anxiety” — defined by the Urban Dictionary as being in the state of “nervous impatience” while waiting for delivery, accompanied by “frequent glances at the front door for signs of the courier when you hear any audible or visual cues of their presence” — has entered the contemporary lexicon.
Last month, The Edge Singapore checked the delivery time for 10 different items ranging from clothes and electronics to food and fashion items acquired from Lazada and Shopee, two of the most popular e-commerce sites here.
For products sold by local sellers, the delivery time could be as long as five days; while the waiting time for those from overseas could be as long as 19 days from the moment a buyer hits the order button.
For example, an electronics device bought from a local seller on Oct 9 took six days to arrive at the doorstep. Another product bought in September from the UK took 10 days to arrive, spending three days alone in Singapore.
The UK package spent only one day in air transit but five days in the local warehouse on the last leg. In contrast, Amazon offers US Prime members free one-day, coast-to-coast shipping for 15 million items.
So, why do deliveries take so long? Singapore is known to be a key global logistics node but why isn’t the same efficiency seen within this tiny island?
At a glance, there seems to be no shortage of logistics companies in Singapore. According to the Ministry of Manpower (MOM), there are almost 80,000 workers working in the so-called “other transportation and storage” sector as of end 2021, which MOM says comprise employees in logistics companies.
Statistics from Singstat in 2020 also showed that there were about 2,600 companies under this classification, with an additional 700 postal and courier companies here.
With over 3,300 logistics companies based in a small island state, you could be wondering why it still takes longer to get a local package compared to one from hundreds of kilometres in other countries.
According to Raymon Krishnan, president of the Logistics and Supply Chain Society in Singapore, these 3,300 companies are all classified under a broad sector and serve many different “verticals”. Some may serve only certain clients or brands, while others specialise in the delivery of certain goods, including medicines, refrigerated goods or furniture.
But having a fragmented market also means having multiple points of failure. Krishnan says: “In any logistics pipeline, there are many handoffs, intermediaries and partners. The minute one link fails, a shipment is affected. And when shipping internationally, the handoffs are even more complicated.”
As an illustration, a business-to-business (B2B) delivery company picks up a package from overseas at the airport cargo terminal. It is then handed over to a local warehouse operator who, after further sorting, hands it to a last-mile delivery company.
To make the landscape even more fragmented, some logistics companies subcontract a portion of their deliveries out to even smaller logistics companies. Krishnan says even large companies, like DHL, FedEx and UPS subcontract their deliveries out to smaller operators for the last mile.
While Singapore may be small, it also has an outsized appetite for e-commerce which leads to high delivery volumes. According to Statista, Singapore’s e-commerce revenue is set to reach US$7.29 billion ($10.47 billion) this year and grow at a CAGR of 16.23% to hit US$11.45 billion by 2025. The number of users is seen to reach 4.1 million by 2025, with user penetration up to 67.2% in 2025 from 59% this year. In comparison, Malaysia is set to hit US$10.1 billion this year while Indonesia is projected to be a US$62.6 billion market.
Seen in this context, the market, divvied up among so many players, is as fragmented as it could be. Is the industry ripe for consolidation? Will this presumably help improve efficiency, especially in the last mile?
Last-mile delivery quality here has room for improvement. Are there too many logistics players and can consolidation or technology help?
