Keppel Logistics aims to stay relevant with e-commerce
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Staying relevant in a fast-changing sector is a key strategy for Keppel Logistics, said chief executive Desmond Gay.
This is why the company – a wholly-owned unit of Keppel Telecommunications & Transportation – embarked on a $4.6 million acquisition of a majority stake in e-commerce logistics company Courex in October.
Mr Gay told us recently: “We are constantly striving to innovate and evolve, and the Courex acquisition has allowed us to structure ourselves in a way that we become more relevant to the market and the new economy. It is just the first step of things to come.”
Courex is a third-party logistics service provider that supports the needs of retailers, from last-mile delivery to international shipping and warehousing. It counts Singapore Airlines and Hachi.Tech among its clients.
Keppel Logistics holds a 59.6 per cent stake in Courex, while the remaining 40.4 per cent is held by founder Joe Chua, who continues to lead the company.
Mr Gay noted that the acquisition came as a “natural progression” for Keppel Logistics, as it moved to expand from its traditional B2B (business to business) business into the B2C (business to consumer) space, or the e-commerce market.
“As companies, including our customers, begin to re-look and evolve their supply chains against the backdrop of an e-commerce dominated landscape, we likewise have to adapt and grow new muscle, and develop new capabilities and competencies,” he said, noting that doing so will ensure the company remains competitive.
Incorporating Courex’s capabilities into Keppel Logistics’ business also allows the firm to better cater to its customers, he said. This is key as more brick-and-mortar retailers turn to online platforms to complement their sales channels.
The growth prospects for e-commerce in South-east Asia are significant, Mr Gay noted.
“Keppel Logistics holds a 59.6 per cent stake in Courex, while the remaining 40.4 per cent is held by founder Joe Chua, who continues to lead the company.”
He cited a recent study by Google and Temasek Holdings, which says e-commerce in the region is expected to soar from US$5.5 billion (S$7.8 billion) last year to about US$88 billion over the next decade, and possibly up to US$128 billion even. Singapore’s e-commerce market is forecast to grow from US$1 billion to US$5.4 billion over the same period.
“Being in the middle of a region like South-east Asia, with more than 600 million people – there we have a huge market opportunity,” said Mr Gay. “With the acquisition, we’re only just starting, and we’re ready to have a bite of the e-commerce pie.”
Mr Gay expects Keppel Logistics, which has a presence in Australia, China, Indonesia, Malaysia, Singapore and Vietnam, to grow its e-commerce logistics business by at least 15 per cent in annual revenue over the next few years.
He singled out Indonesia and Vietnam as “bright spots”, noting that Indonesia, in particular, is expected to make up over half the South-east Asian e-commerce market by 2025. The firm will explore opportunities to enter new markets such as Thailand, the Philippines and Myanmar.
Amid a hyper-competitive market – reports last month said the US-based Amazon is set to enter South-east Asia next year – Mr Gay is positive Keppel Logistics will be able to maintain its edge.
“A market that is US$88 billion and possibly US$128 billion is big enough, I think, for the various players,” Mr Gay, said.
“If you look at South-east Asia, it’s still very fragmented. This means you have specialists that provide only last-mile services, for example, or parts of the supply chain, but not quite the entire supply chain.”
He added: “Our synergies with Courex will also help us move towards being an omni-channel logistics service provider, while retaining our core strengths in providing best-in-class third-party logistics solutions.”
Questions & Answers
Q.What was the primary reason for Keppel Logistics acquiring a majority stake in Courex?
What was the primary reason for Keppel Logistics acquiring a majority stake in Courex?
The acquisition allowed Keppel Logistics to become more relevant in the e-commerce market and new economy, moving from its traditional B2B business into the B2C space. It also enabled them to expand capabilities and better serve customers adapting to online platforms.
Q.How much did Keppel Logistics spend to acquire Courex, and what stake do they now hold?
How much did Keppel Logistics spend to acquire Courex, and what stake do they now hold?
Keppel Logistics spent $4.6 million on the acquisition. They now hold a 59.6 per cent majority stake in Courex, with the founder, Joe Chua, retaining the remaining 40.4 per cent and continuing to lead the company.
Q.Which specific countries does Keppel Logistics expect to be key growth areas for its e-commerce logistics business?
Which specific countries does Keppel Logistics expect to be key growth areas for its e-commerce logistics business?
Indonesia and Vietnam are identified as 'bright spots' for growth. Indonesia is particularly significant, as it is expected to account for over half of the South-east Asian e-commerce market by 2025.
Q.What financial growth is Keppel Logistics forecasting for its e-commerce logistics business?
What financial growth is Keppel Logistics forecasting for its e-commerce logistics business?
The company expects its e-commerce logistics business to grow its annual revenue by at least 15 per cent over the next few years. This aligns with the significant growth prospects identified for e-commerce in South-east Asia.
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