Pos Malaysia Bhd, Malaysia's biggest postal company, is planning to talk with Alibaba Group Holding Ltd this month as the 200-year old company wants a more direct role in providing logistics services, especially in the growing online retailing sector.
Mohd Shukrie Mohd Salleh, Pos Malaysia chief executive officer, was quoted by Bloomberg as saying that the company will talk with Alibaba about plans on how to ship goods sold on its platform without using middlemen.
Mohd said that in the first quarter of this year, parcel deliveries for online shopping rose about 40 percent and the earnings for the year are expected to exceed the previous year's earnings.
"My focus is still e-commerce, and it is driving the logistics business. When e-commerce is booming, somebody needs to deliver these items," Mohd Shukrie said in an interview on Sept. 27. "Marketplace owners want to deal with logistic players directly. I'm going to China to meet up with Alibaba and other market players in October," he added.
The Universal Postal Union has estimated the demand in global retail e-commerce market to reach about $1.2 trillion, which drove many postal companies in Asia to remodel themselves and expand overseas.
Among 14 global couriers, Pos Malaysia, which started delivering mail by bicycle in the 1800s, is this year's top performer with a market value of about $500 million, and a total return of 49 percent, surpassing United Parcel Service Inc. and FedEx Corp.
The company's stocks climbed 88 percent from February low when earnings from its courier business and potential rise in tariffs drove the shares.
Mohd Shukrie said that the company's proposal to raise postal rates is still being examined by government. Pos Malaysia is valued 25 times its projected 12-month earnings, higher than UPS, the world's most valuable courier company, with 18.
Alibaba said in a statement e-mailed to Bloomberg that Cainiao Smart Logistics Network Ltd., its delivery affiliate, "works collaboratively with logistics participants to enhance customer experience and operation efficiency."
Although freight forwarders, or so-called consolidators such as Japan's Sankyu Inc. handle Pos Malaysia's parcel deliveries for Alibaba, Mohd Shukrie said they want to deal directly with marketplace owners.
"The future is about cutting the middleman, and the existence of consolidators will be under threat," Mohd Shukrie said. "Right now, we deal more with consolidators for parcels from China to the world, but understandably marketplace owners want to deal with logistic players directly."
Consolidators, which collect cross-border mail to specific destinations, often deal for special rates with the public postal operators to distribute the bulk mail.
Mohd Shukrie said that Pos Malaysia has completed the purchase of KL Airport Services Sdn. from parent DRB-Hicom Bhd in September, a move that is expected to raise its revenue to 2 billion ringgit ($482 million) in the year ending March 2018 and to enable them to offer more logistics services overseas.
Mohd Shukrie added that KL Airport now has two aircraft which can pick up cargoes from the region including Hong Kong and expand the fleet by one plane annually in the next five years.