Battle for Malaysia’s ‘last mile’: Local couriers struggle against foreign players

Analysts say Indonesia-based J&T Express commands significant market share in the Malaysian courier space. / Photo credit: J&T Express

To say last year was nightmarish for Malaysian courier companies would be an understatement.

Household names in the industry either folded or had to sell their loss-making last-mile businesses.

Such was the fate of two Bursa Malaysia-listed logistics players, Nationwide Express and CJ Century Logistics. Nationwide Express, founded in 1985, shut its business on November 16 last year, retrenching 1,100 employees. It would then be delisted and go into receivership.

A year earlier, CJ Century Logistics had sold its loss-making courier arm for 7.5 million ringgit (US$1.6 million) after bleeding losses since 2018.

Both companies in their respective bourse filings attributed their troubles to stiff competition and higher startup costs. These developments come despite the surging demand for courier services in Malaysia – and the rest of the world – as Covid-19 lockdowns were put in place.

According to data by industry regulator Malaysian Communications and Multimedia Commission (MCMC), parcels per capita jumped from 7.6 in 2019 to 23.5 in 2021.

Malaysian courier companies who survived were left to slug it out with tech-enabled upstarts. Some veterans tell Tech in Asia that the battlefield has become uneven, blaming their younger, foreign-owned counterparts for deploying “aggressive pricing strategies.” They didn’t name these foreign-owned couriers though.

Two Kuala Lumpur-based equity analysts who cover the sector tell us that frustration among some of the older firms was at a boiling point. Even Malaysian Communications and Digital Minister Fahmi Fadzil entered the fray, telling reporters on July 4 that his ministry would study the base price and licensing problems in the courier industry. Fahmi’s ministry oversees MCMC.

Price dumping for valuation purposes?

To get a feel of the tension brewing among courier companies in Malaysia, consider some of the key points Pos Malaysia CEO Charles Brewster flagged during his June 26 media luncheon in Kuala Lumpur. Bursa-listed Pos is the country’s national courier.

Pos Malaysia CEO Charles Brewster / Photo credit: Pos Malaysia

Brewster told the press that he was in discussions with regulators MCMC and the Malaysian Anti-Competition Commission (MyCC) regarding the problems posed by foreign players.

While MCMC is the industry regulator, MyCC is the country’s anti-competition body. But MyCC doesn’t have powers across a few sectors including logistics. Reining in industry players falls on the shoulders of MCMC.

Not for the lack of trying

Not out of the woods yet