COURIER INDUSTRY FACING COMPETITION
Jan 30 - Feb 5, 2012
The courier industry in Pakistan is one of the growth prone sectors. Most of the courier service operators provide guaranteed, fast, and reliable, on demand, world-wide, integrated, door-to-door movement of shipments which are tracked and controlled throughout the journey.
The courier industry is contributing a significant role in the development of the economy by simplifying and speeding up the process of transporting documents, parcels, packets, and goods.
As a matter of fact, the courier industry is one of the world's fastest-growing sectors since 1998. Its growth has been more than twice that of the global economy as a whole. It is expanding particularly rapidly in the transition and emerging market economies. The courier market has undergone a widespread change process in recent years worldwide.
Competition in Pakistan is increasing, first among the different courier service providers in the country, second through the developments in the e-sector, and third through logistics.
Recent years have seen that the courier industry in the country is competing with many other industries such as transport business, media distribution systems, and electronic commerce.
Most importantly, new online services by banks, telecommunication companies, or e-business platforms have created new options for the customers to send mail through the internet. As a result, e-commerce and online postal services have to face competition.
Pakistan's economy has moved from argi to industry to trading economy; where presently most of the companies are involved in one way or other with the marketing of the goods being imported in the country.
Current economic condition is also putting pressure on the courier industry. Courier expenses are one of the first few expenses, which the companies are trying to minimize so as to keep the price of their products and customer base intact in the current straitened times.
With the increasing means of communication, businesses seek the best, most flexible and cost-effective method of communication with their customers. The internet and broadband are the basis for those new means of communication. Major clients of courier companies were the cell phone companies, listed companies and banks providing credit cards.
However, one of the major developments is that almost all the mobile companies and banks offering credit card services nationwide have stopped sending printouts of the bills on monthly basis to their customer through courier and are opting to send monthly bill information to the personal inbox of their customers. Listed companies are more inclined to post their financials (both audited and un-audited) on their website instead of sending hard copies on quarterly, bi-annually and yearly basis.
Eid, birthday and new-year wishes are now sent by e-mail or SMS.
With the new development in telecommunication sector, internet has opened up fresh possibilities for advertisers and companies in their communication with their customers. Those technological developments and the new means of communication have created strong competition for the courier industry.
Hence, it is safe to say that the courier industry is not a self-contained industry, but one that is connected to, and in competition with, many other industries offering alternative channels of communicating, advertising or delivering information.
The essence of courier services lies in the seamless and efficient coordination of collection, transportation and the delivery of items. There is a general feeling among industry participants and commentators that courier industry is facing a multitude of pressures that require a positive industry response so as to ensure that the industry meets the needs of its customers. The courier companies in Pakistan are facing three main threats at present which can be categorized as follows:
* Competition from the alternative operators - most of the companies engage multiple courier service providers for sending their documents, parcels, samples, and packets. It also happens that one who has good relations with the manager of the company gets maximum consignments. It might consistently lose mail volumes and therefore is not able to generate enough revenue to cover their fixed costs. Moreover, there is a further risk that alternative courier operators will 'cherry pick' profitable parts of the postal market, leaving the new entrants or lesser efficient to take the rest of the costly and unprofitable routes, which effectively lead the infant companies to financial bankruptcy.
* Technological competition - Individuals and businesses are increasingly turning to electronic forms of communication and moving away from the postal service. One of the biggest examples of this has been the move by various cell companies/bank towards online interaction.
* Internal inefficiency - This includes outdated machinery, inflexible working practices and inefficient network structures (for example a failure to optimize the number of mail centers). Sometimes, packages are gone missing or damaged or opened packages are delivered, which effectively reduces the clientele of the company.
Individual courier companies should try to develop competitive edges on others by offering new value added services focusing on the customer, tapping new markets, and taking orders from homes. Working and delivery on holidays can be one of the few steps, which can increase the revenues of the courier companies and tax collection of the government.
It is also important for the courier services providers to take steps to improve their efficiency of the service. As a labor-intensive network business, it is therefore essential that courier companies should be as efficient as possible and should not only meet the threat of competition but also ensure that their charges are reasonable enough to allure masses.
The major threat to the courier service providers does not emanate from rival operators, but from alternative communication media, and in some cases internal inefficiency.