In this post, we shall examine the sustainability and feasibility of the courier industry in Singapore. Sustainability of industry is very important. If an industry is sustainable, it will persists through times and last for the long term. Only then will the people enjoy its products and services for the long term. If an industry is not sustainable, not only will it affect the players, it will also affect their pool of customers whom will have to look for alternatives to replace the products and services received from the industry.
Hence, analysis of an industry’s sustainability is important for both its players and their customers.
So.. is the courier industry in Singapore sustainable?
First of all, demand for courier services in Singapore is modest. Though it may not be something that appeals to the mass market, there are inevitably some people who will need it from time to time. The demand for courier services generally comes from the commercial sectors where businesses need to pass each other items such as documents on a same day basis. As more businesses set up in Singapore, their demand for courier services will increase over time. I would estimate a modest growth rate in the demand for courier services in Singapore.
Secondly, there are not many good courier companies in Singapore. A good courier company needs to perform well in a lot of aspect – customer service, delivery standards, accountability, and so on. Organizations such as SingPost and PCA Master are two of the most reliable courier companies I find in Singapore. Due to the less intense competition, the top courier companies will be getting a better pie, and thus able to last it out through long and tough times.
Thirdly, the courier companies are earning decent profits, albeit not a lot. Though the price point of the courier services is not high, it is enough to cover the operational expenses of the courier companies. However, it is to note that the vehicle prices in Singapore may fluctuate wildly over time. This will affect the cost of vehicles and leasing costs as well. The fluctuation of these costs will affect the profitability of the courier companies. As courier services are quite price sensitive, its price will generally remain around the same level. Hence, keeping the prices of the courier services constant and increasing its cost, the profitability of the courier companies will take a downturn. However, if the courier companies are able to hedge well against the potential rising cost of vehicles, they will be able to maintain their profitability over time.
The courier industry is a challenging industry. However, I believe that the industry will be sustainable over time.