Short introductionWe’re thrilled to sit down with Rohit Laila, a veteran in the logistics industry with decades of experience spanning supply chain and delivery. With a deep passion for technology and innovation, Rohit offers a unique perspective on the evolving landscape of postal and logistics services. In this interview, we dive into the financial performance of a leading postal operator, exploring the challenges and successes across its postal, retail, aviation, and logistics segments. We also discuss the strategies driving transformation, the impact of digitalization, and the outlook for navigating a complex market.
Can you walk us through the standout aspects of the recent financial performance for a major postal operator like Pos Malaysia in Q2 FY2025?
Absolutely, Alexandre. For Q2 FY2025, Pos Malaysia reported a revenue of RM441.6 million, which is a solid figure given the current market dynamics. What’s particularly noteworthy is the 17.4 percent improvement in Loss Before Tax, narrowing it down to RM42.3 million. This indicates that while the company is still operating at a loss, the measures they’ve taken to streamline operations and boost efficiency are starting to pay off. It’s a step in the right direction toward financial stability, though there’s still a long road ahead.
What do you think the improvement in Loss Before Tax means for the broader financial health of a company in this sector?
Narrowing the loss to RM42.3 million is a significant signal that the company is managing its costs better and possibly finding new revenue streams. It suggests that strategic initiatives, like operational integrations or cost-cutting measures, are beginning to bear fruit. However, financial health isn’t just about reducing losses—it’s about achieving sustainable profitability. For a postal operator, this improvement boosts confidence among stakeholders, but they’ll need consistent progress to fully turn the corner, especially with structural challenges in the industry.
Looking at the revenue drivers, what do you believe contributed most to the RM441.6 million figure for the quarter?
I’d say the revenue of RM441.6 million is likely a result of diversified contributions across their segments. The aviation segment, for instance, has been a strong performer with growth in cargo handling and inflight catering, fueled by regional air traffic recovery. Additionally, the postal segment’s parcel volume growth, despite its challenges, probably played a role thanks to integrated mail and parcel operations. Retail also held steady, supported by operational efficiencies. It’s this mix of segment performances that likely propped up the overall revenue figure.
Shifting to the postal segment, what do you see as the biggest hurdles they’re facing right now?
The postal segment is grappling with some tough structural declines, which is a common issue for traditional mail services as digital communication continues to dominate. On top of that, there’s intense competition from private courier services, which often offer faster and more flexible delivery options. Regulatory challenges in the courier landscape also add pressure, as compliance can be costly and complex. These factors combined make it a really challenging space to operate in without significant innovation or adaptation.
How has integrating mail and parcel operations helped drive parcel volume growth in this segment?
Integrating mail and parcel operations is a smart move because it streamlines processes and reduces operational silos. By combining these functions, a company can optimize their delivery networks, cut down on redundant costs, and improve speed and reliability. This likely resonated well with customers, leading to higher parcel volumes. It’s about leveraging existing infrastructure more effectively—turning a traditional mail system into a modern parcel delivery machine, which is where the growth is in today’s market.
What strategies can a postal operator employ to tackle regulatory challenges in the courier industry?
Regulatory challenges require a proactive approach. First, building strong relationships with regulators to influence fair policies is key—advocating for reforms that balance compliance with business needs. Second, investing in technology to ensure transparency and meet regulatory standards, like tracking systems for accountability, can help. Lastly, diversifying service offerings to reduce dependency on heavily regulated areas can provide some buffer. It’s about staying ahead of the curve and adapting swiftly to changing rules.
Turning to the retail segment, what operational efficiencies have been most impactful in maintaining steady performance?
In the retail segment, operational efficiencies often come down to optimizing the customer experience while cutting costs. This could include better staff training to handle transactions faster, streamlining inventory management to avoid overstocking, and improving point-of-sale systems for quicker checkouts. These small but critical tweaks reduce operational drag and keep performance steady, even when market conditions are tough. It’s all about doing more with less.
How has digitalization influenced the retail segment’s ability to stay competitive?
Digitalization has been a game-changer for retail in postal services. By introducing online platforms for services like bill payments or package tracking, companies make it easier for customers to engage without visiting a physical location. This not only cuts down on in-store congestion but also meets the modern customer’s expectation for convenience. Additionally, digital tools help analyze customer behavior, allowing for targeted offerings. It’s a powerful way to stay relevant in a world where digital-first is the norm.
Can you share insights on how new service offerings in retail are resonating with changing customer behaviors?
New service offerings, like expanded financial services or e-commerce support at retail counters, are aligning well with how customers behave today. People want one-stop solutions—places where they can send a package, pay a bill, and maybe even shop online all at once. The response has likely been positive because these services save time and cater to a busier, more connected lifestyle. It’s about evolving the traditional post office into a multi-service hub that fits modern needs.
The aviation segment has shown impressive results. What do you think has driven growth in areas like cargo handling and inflight catering?
The aviation segment’s growth is largely tied to the recovery of regional air traffic, which has boosted demand for cargo handling as more goods move by air. Inflight catering and engineering services also benefit from increased flights—more passengers mean more meals, and more planes in operation mean more maintenance needs. Additionally, market-leading operations, where a company excels in efficiency and reliability, help secure contracts and build trust with airline partners. It’s a combination of external recovery and internal excellence.
How critical has the recovery of regional air traffic been to this segment’s success?
Regional air traffic recovery has been absolutely critical. When flights were grounded or limited during past disruptions, aviation-related services took a massive hit. Now, with routes reopening and travel demand rebounding, there’s a direct uptick in cargo volumes and catering needs. It’s like turning the engine back on for this segment—without that recovery, growth would be stagnant, no matter how efficient the operations are. It’s a clear reminder of how interconnected these industries are to broader economic trends.
What steps can a company take to sustain a leading position in aviation operations?
Staying ahead in aviation operations requires a focus on reliability and innovation. This means investing in state-of-the-art equipment for cargo handling and ensuring top-notch quality in catering services to win client trust. Building strong partnerships with airlines is also crucial—long-term contracts provide stability. Additionally, adopting sustainable practices, like reducing fuel waste in operations, can set a company apart as a responsible leader. It’s about consistently delivering value while anticipating industry shifts.
On the flip side, the logistics segment faced some struggles. What’s behind the lower demand in automotive and freight sectors?
The softened performance in logistics often stems from macroeconomic factors affecting the automotive and freight sectors. For automotive, reduced consumer spending or supply chain bottlenecks for parts can lower demand for transport services. In freight, global trade slowdowns or regional economic dips can reduce shipment volumes. These are cyclical challenges, but they hit hard when a company relies heavily on these sectors for revenue. It’s a tough spot that requires diversification to mitigate risks.
How has the downtime of a marine vessel affected logistics operations, and what’s the plan to address this?
The extended downtime of a marine vessel can be a significant blow to logistics operations, disrupting schedules and reducing capacity for freight transport. It likely led to delays, frustrated clients, and increased costs for alternative arrangements. The plan to resume service by early Q3 probably involves expedited repairs or maintenance checks to ensure the vessel meets safety and operational standards. In the meantime, rerouting cargo through other means or partnering with third parties might help bridge the gap.
Despite these logistics challenges, how is the focus on third-party logistics growth shaping the future?
Pushing third-party logistics, or 3PL, is a forward-thinking strategy. It allows a company to manage supply chains for other businesses, which diversifies revenue beyond traditional freight or postal services. By building expertise in warehousing, inventory management, and last-mile delivery for clients, they can tap into a growing market where businesses outsource logistics to focus on their core operations. It’s a way to turn challenges into opportunities, creating resilience against sector-specific downturns.
Looking ahead, what is your forecast for the logistics and postal industry in the remainder of FY2025?
I think the remainder of FY2025 will continue to be demanding for the logistics and postal industry. Structural declines in traditional mail will persist, pushing companies to innovate with parcel and e-commerce solutions. Logistics will face headwinds from economic uncertainties, but sectors like 3PL and aviation-related services could provide growth pockets if regional recovery holds. Technology adoption will be critical—those who invest in digital tools and sustainability will likely emerge stronger. It’s going to be a balancing act between managing costs and seizing new opportunities.
