Logistics Performance in Southeast Asia – Q2 2020

Sep 15, 2020

E-COMMERCE DELIVERY OVERVIEW IN SOUTHEAST ASIA

The first half of 2020 has been a rollercoaster ride for global and regional e-commerce logistics, setting off supply and demand shocks throughout the industry.

As Parcel Monitor, we witnessed a spike in e-commerce demand particularly during the initial wave of the COVID-19 pandemic. With that, we analyzed the billions of parcels tracked on our platform to uncover how the logistics industry in Southeast Asia has performed during the second quarter of 2020. 

In this article, we provide a glimpse into how COVID-19 has impacted transit times in Singapore, Thailand, Indonesia, and Malaysia and how these countries have adapted to these new circumstances. 

For the full in-depth analysis, download Parcel Monitor’s Southeast Asia E-Commerce Logistics Benchmarking Report here (for free)! In this report, obtain critical performance metrics such as transit times for domestic shipments, first attempt delivery success rates, and involuntary returns to the sender.

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This analysis focuses on four Southeast Asian economies: Singapore, Thailand, Indonesia, and Malaysia. Their different economic and logistics footprints, along with varying government responses to the pandemic paints a comprehensive picture of how recovery might look like in the region.

HOW COVID-19 HAS AFFECTED E-COMMERCE LOGISTICS

We see three major impacts from COVID-19:

  1. Lockdown measures shift consumers online

Lockdowns with the closure of many physical retail outlets forced consumers online during the pandemic. They, therefore, turned to e-commerce for daily necessities. These higher e-commerce volumes directly affected the logistics carriers, with most struggling to adapt to the increase in demand.

  1. Impaired logistics productivity and effectiveness

A combination of initial infections at processing facilities and social distancing requirements in the COVID-19 response significantly affected logistics carriers. The resulting scale down and re-design of logistics operations led to reduced efficiency in the initial stages of the crisis

  1. Disruption of cross-border supply chains

Production and supply chains shut down in China from February 2020, affecting cross-border logistics and e-commerce supply chains. Especially for verticals with longer production lead times such as apparel, the full impact of COVID-19 is still materializing.

EXAMINING DOMESTIC TRANSIT TIME OVER THE FIRST HALF OF THE YEAR

We analyzed the changes in the domestic transit time of e-commerce deliveries across Singapore, Thailand, Indonesia, and Malaysia, accounting for social restrictions, lockdowns, and adjustments in logistics capacity.

Transit time to “first delivery attempt” (“transit time”) is a key performance indicator for delivery logistics performance. For e-commerce merchants, shorter transit times correlate with higher end-consumer satisfaction and retention.

a. Singapore

Singapore Domestic Transit Time

On 3rd April 2020, Singapore implemented stringent movement restrictions and social distancing requirements to curb the spread of COVID-19 (“Circuit Breaker”).

This showed a 15% spike in transit time during the lockdown period, as compared to the early months of the year. These are encouraging signs that carriers have adjusted to these circumstances, as transit times normalized in June.

b. Thailand

Thailand Domestic Transit Time

The Thai government implemented a series of lockdown measures including a curfew in early April. In addition, the government of Bangkok closed most non-essential businesses in the capital.

Our analysis shows a 10% increase in delivery times during this period. Compared to the other countries, this is the lowest relative spike in transit time during the social controls period.

To a certain extent, this shows the adaptability of the logistics industry in Thailand, responding to the disruptions caused by COVID-19.

Nevertheless, we have yet to see transit times to recover fully.

c. Indonesia

Indonesia Domestic Transit Time

While an official nationwide lockdown was never announced in Indonesia, the government approved large-scale social restrictions (known as ‘PSBB’) in some cities and parts of the country in April.

We see a 26% increase in transit time during this period, which coincides with a spike in online purchases on e-commerce platforms. Logistics carriers have yet to fully overcome the challenges amidst the pandemic as of the end of June.

d. Malaysia 

Malaysia Domestic Transit Time

In late March this year, Malaysia started a ‘Movement Control Order’ to restrict the movement of people, goods, and services. Stringent social distancing measures were implemented in warehouses, affecting the ability of logistics carriers to respond to demand fluctuations.

This was coupled with a significant surge in demand. The increase in e-commerce sales in Malaysia during the lockdown was further amplified by the festive season of Ramadan in May. In 2019, Malaysia experienced a 55% spike in parcel volumes during the Ramadan season.

Delivery performance in Malaysia was therefore impacted by a 76% spike in-transit time, the highest amongst the countries. We see transit times tapering down in June regardless, suggesting a pending return to pre-COVID transit times.

MOVING FORWARD: A NEW NORMAL IN SOUTHEAST ASIAN E-COMMERCE

Perhaps “guarded optimism” would be the best way to look at the next quarter for logistics carriers and overall delivery performance.

While social distancing appears to be here to stay, the initial flurry of broad measures to combat COVID-1 is transitioning across the region to a more targeted approach. These measures, combined with logistics carriers adopting robust social distancing and digitization initiatives, mean transit times will return to their pre-COVID levels over the next few months.

It is also encouraging to see consumers and merchants adapting to an online-first approach. The pandemic has accelerated e-commerce adoption and with a foreseeable sustained increase in baseline demand. Those carriers who have further embraced technology to sustain permanently higher shipment volumes are set to emerge stronger out of this crisis.

On a whole, more attention and resources will go towards ensuring supply chain resilience throughout the e-commerce logistics industry. We look forward to seeing the logistics industry head towards normalization and surpass growth rates from pre-COVID times while continuing to improve performance.

For the full 18-page report on the state of e-commerce logistics in Southeast Asia, download our free logistics benchmarking report here

This article was authored by our Founder and CEO, Dr. Arne Jeroschewski and first appeared on LogiSYM.

For more exclusive reports, insights, and interviews on the latest updates in e-commerce and logistics, follow us on LinkedIn or join our community as a member.

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