Logistics: Last-mile delivery still in demand

This article first appeared in Digital Edge, The Edge Malaysia Weekly, on June 13, 2022 - June 19, 2022.

"What reinforces this further is that stores that were previously not online now have an internet presence, so almost everything can be purchased online. The ease of e-payments has also facilitated this trend.” - Jeevan

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When the pandemic hit in 2020, global and domestic supply chains were the first to be interrupted by the government-sanctioned lockdowns. This inadvertently led to an increase in online shopping, forcing businesses to adopt e-commerce to continue making sales.

But logistics remained an issue as there was not enough manpower for last-mile delivery. Jeevan Kumar, co-founder and group CEO of on-demand delivery provider Zoom, recalls that there was an exponential demand for delivery services overnight as merchants were seeing a dramatic growth in online sales.

It was a domino effect down the supply chain, he says, as the increase in delivery volume led to logistics companies not having enough warehouses to store the items, followed by having insufficient manpower to deliver them.

“Delivering goods to houses also came with a set of Covid-19-related concerns, where we needed to acquire a lot of facemasks, gloves, hand sanitisers and parcel sanitisers for our riders because they would need to sanitise the parcels in front of the recipient,” says Jeevan. “While it was good for us because our revenue grew, we had to fork out a lot of money to adhere to the standard operating procedures (SOPs) put in place.”

He says 2020 was the first year Zoom made a profit and it has been profitable since. But will this trend continue? He believes so as people are now more accustomed to the ease and convenience of online shopping.

A segment that may see a slowdown in deliveries is food and beverage (F&B), says Jeevan, as people prefer to socialise over a meal and would rather eat out than order in. Whereas for general e-commerce, the volume of deliveries has been growing steadily with the reopening of the economy.

“Humans are creatures of habit and becoming more digital is something we’ve all lived with over the last two years, making us dependent on buying things online and receiving them on our doorstep a few days or hours later,” he says.

“What reinforces this further is that stores that were previously not online now have an internet presence, so almost everything can be purchased online. The ease of e-payments has also facilitated this trend.”

As the economy reopens, there are more job opportunities. Freelance delivery riders who had lost their jobs during the pandemic would want to return to their pre-pandemic positions or look for a more stable source of income.

“There has been a dip in manpower. We used to get more than 100 people coming to the office to apply for a job with us as freelance delivery riders, but now we get about half of that,” says Jeevan.

Enhancing Zoom’s tech capabilities

Zoom started out as a tech-enabled company. However, it had to upgrade and reinforce its technology as well as digitise its physical operations during the pandemic. Jeevan says its electronic Know Your Customer (eKYC) process was something the company adopted to onboard new delivery riders since physical contact had to be limited.

“These riders were coming to the office to sign up, so we had to turn that process fully digital. All a rider had to do was go to our website to sign up online and submit the relevant documentation. Once approved, they could immediately start doing deliveries, which completely eliminated having a lot of people at our office,” he adds.

“With physical operations, each rider has a list of orders to pick up from our clients and the items need to be put in a specific area so there is no interaction or human contact.”

On the company’s data protection and privacy policy, Jeevan says it adheres to the Personal Data Protection Act 2010 (PDPA) and ensures that only relevant data is shared with relevant parties for the purpose of order fulfilment. 

“With our clients, we only share the data of consumers who have purchased from them because we need to invoice them for the specific orders. All this data is kept on our secure server and we use the cloud services of Amazon Web Services. We also make sure we do not hold data longer than a year,” he explains.

Jeevan says the company uses a double-verification method so that buyers or end-customers can access data when their items are delivered. Typically, Zoom sends customers a notification of delivery with a tracking code to check on the parcel’s delivery status. When the item is delivered, the rider needs to take a photo as proof of delivery. Customers can access this photo with the double-verification method in the event that they would like to see the proof-of-delivery photo.

“Sometimes, the image taken can have sensitive information, whether of a location or a person. In order for them to access the image on the tracker, they would need to input the last four digits of the phone number they used to buy the product,” he explains.

“This information is typically accessed when the customer cannot find the parcel and wants to know how to locate it. The photo could show, for example, that the parcel is at the guard house or was received by the maid but has not informed the customer that the item has arrived.”

Cold chain logistics set to grow

There has been a sudden demand for cold chain delivery services. A cold chain is a low-temperature-controlled supply chain, while an unbroken cold chain is an uninterrupted series of refrigerated production, storage and distribution activities, along with the associated equipment and logistics, which maintain quality via a desired range of low temperatures.

Jeevan says consumers have started ordering online frozen foods, such as chicken, which require low-temperature-controlled trucks to deliver them. As there were not many players in the market with such capabilities, Zoom launched a cold chain division to focus on grocery and healthcare-related deliveries.

“Things like confectionery, meats, seafood and vegetables from grocers need this service. Subsequently, there was demand in the healthcare space to deliver vaccines to clinics and vaccine administration centres. These items need to be kept constantly cold and cannot be allowed to thaw out,” he elaborates.

On the National Courier Accelerator Plan (Pakej) launched by the Malaysian Communications and Multimedia Commission (MCMC) in June last year, Jeevan says he believes it is a good initiative as it ensures proper regulation of the industry.

He points out that prior to Pakej, the barrier to entry was low and anyone could set up a courier company without the necessary approvals. By law, a company would need to register under the Postal Services Act 2012 (PSA 2012) to provide courier services.

“There was an abundance of courier players that went unregulated, which also disrupted market pricing. With Pakej, hopefully this will come under control and everyone will be on a level playing field,” says Jeevan.

“The PSA 2012 registration has to be renewed every year and we need to let MCMC know how many vehicles we have, the number of riders and clients, revenue and other details about the company, so they can keep tabs on the industry and make sure everything is in check.”