Traditional freight forwarders keen to ride the e-commerce wave

PETALING JAYA: Traditional freight forwarders and logistics players are keen to go into e-commerce logistics given the strong demand and popularity of online business activity.

Federation of Malaysian Freight Forwarders (FMFF) vice president and Selangor Freight Forwarders & Logistics Association president Datuk Tony Chia Han Teun said many traditional freight forwarders in are interested to venture into this new stream of business.

“Many realise that they have to be ready for e-commerce and be part of the new wave, or risk being left behind. Statistics show that e-commerce transactions have been growing steadily and traditional freight forwarders try to see where they can position themselves in the e-commerce growing business,” Chia told SunBiz recently.

He added that many forwarders see e-commerce as the only way forward as more and more online sales are made rather than through traditional retail channels. Goods moved through e-commerce are not limited to small parcels but can include shipments of many containers in one consignment.



“Except for a handful of traditional freight forwarders who have ventured into or teamed up with foreign e-commerce companies to get into e-commerce, the rest are still in the wait-and-see mode.”

He said e-commerce would need shipments to be contracted, stored and distributed at e-fulfilment centres and then delivered to the customers.

“The traditional freight forwarder may play different roles, such as customs broker for Customs declarations, freight forwarder to plan and move international shipments and also NVOCC (Non-Vessel Operating Common Carrier) and MTO (Multi-Modal Transport Operator) acting for individual customers.

“Under the e-commerce ecosystem, the roles of freight forwarders would be significantly different as the players and their roles in the e-commerce ecosystem are very clear and distinct and would be very different from their traditional business.”

On whether the profit margin would be better, Chia said among logistics companies that are already in e-commerce, there is conviction and belief that the profit margin would be better.

“Since most processes would have been improved through digitalisation and AI (artificial intelligence), there would be expectations of greater efficiency and reduced costs in the long run,” said Chia.

However, FMFF president Alvin Chua Seng Wah opined that while some traditional freight forwarders are interested in e-commerce logistics, some may not be.

“Some want to go into this business to expand their capabilities. But they must have e-capabilities with proper supply chain systems to handle the logistics part. As for last mile delivery, this will be another level and more asset needed.”



He said logistics/shipping for e-commerce would be fast moving with full tracking capabilities door-to-door against traditional forwarding where one handles from port to door or vice versa only.

“The profit margin depends on the volume you are handling and during the start-up, there is a lot of capital injection and you won’t see profit until you reach a certain volume,” Chua said.

Logistics players that SunBiz met recently are generally more receptive towards the logistics opportunities brought on by e-commerce.

UCS Logistics Sdn Bhd business development manager Ken Wong said it is keen to go into e-commerce as it wants to be a total logistics provider.

AES Logistics Sdn Bhd manager Ang Yuek Mei is of the view that the traditional way of running a business is no longer in demand in the market and in the competitive logistics business, it needs to upgrade and move towards electronic business.

“A lot of customers also prefer a one-stop centre to cater to all their needs. So we cannot just focus on forwarding but also cater to warehouse, distribution and more so that we cover a wider market,” said Ang, who plans to apply for the International Integrated Logistic Services (IILS) status from the Malaysian Investment Development Authority.

“The chances of being exposed to foreign investors are also higher (via e-commerce). If we get the IILS status, we’re more sellable to the overseas market,” she said, citing role models like DHL and CJ Century as successful providers in total logistics solutions.

Source: The Sun Daily







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