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21 Jul 2022


Last-mile delivery business, 2022: Growing slower than in 2021 due to numerous challenges (Current Issue No.3332)


        It is expected that the last-mile delivery business will grow roughly 10-15 percent during  2022 in line with the steady growth seen in the e-commerce business. Although the parcel volume will likely increase, the overall growth may slow down due to the high base of 2021 at 41 percent, and the fact that purchasing power has yet to fully recover. Additionally, some consumers have resumed purchasing merchandises via offline channels as the COVID-19 situation appears to have eased. KResearch, however, is of the view that online shopping will become a new normal behavior among Thais over the long term.
        Meanwhile, a 2-digit growth projected for the last-mile delivery business may not reflect improving operating results of all players because they will continue to face intense competition due to the proliferation of players wanting to grab a greater share of the market, particularly those in the e-commerce business that have begun to aggressively penetrate the market and enjoyed exponential growth during the previous waves of COVID-19. Rising costs driven by soaring oil prices, a result of the protracted Russia-Ukraine conflict, represent another challenge among last-mile delivery business operators while service fee hikes may hinge on the cost management of each operator.    
        Given this, operators must adjust quickly to stay afloat. This includes putting in place a more flexible business model, efficient cost management, a diverse range of services and an adaptive approach in seeking new income sources via the blue ocean market such as cold-chain logistics. They should also expand their own ecosystem to cover the entire e-commerce supply chain. Most importantly, they must maintain their service quality. Such adjustments may not be easy as each operator has different flexibility and capability, however.  

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