S$500 Million additional revenue from higher cross-border eCommerce-related activity
Additional revenue for customer
They needed another option – a reliable alternative solution.
The customer is a key eCommerce logistics player based in Singapore that serves both the domestic market and international markets. With the rise in eCommerce, the customer has also increased their participation in cross-border eCommerce logistics, serving eCommerce platform customers with a global reach.
Challenges of Demand Peaks
The client has predominantly relied on air freight to support their international deliveries. During eCommerce peak season sales (e.g. platform “9.9”, “10.10”, “11.11” promotions), the explosion in demand creates several challenges for our customer. These range from dealing with a backlog of cargo accumulation due to a shortage of air capacity, to increased logistics costs from chartering additional freight to meet their required service levels.
To meet the demands of a rapidly growing market while still remaining competitive, it became clear to our customer that they needed another option – a reliable alternative solution.
PSA Cargo Solutions proposed an intermodal sea-air solution to the client, using Singapore as its hub. Cargo is first packed into ocean freight containers and conveyed to Singapore via sea. The cargo is subsequently handled in Singapore at the customer’s own warehouses for sorting, processing, and onward delivery via air.
The introduction of a ‘sea’ option brought immediate flexibility for the customer to accept a sudden surge in volume and deliveries, while still maintaining cost effectiveness. PSA Singapore’s superior connectivity with frequent sailings to major seaports also meant that cargo could reach the Singapore hub with a shorter lead time, for onward processing onto the next leg of delivery.
Starting with a proof-of-concept shipment in 4Q 2018, the solution has gained traction and created a niche market segment for our customer. They have relied on this new solution to create an ‘economy’ delivery service to complement their ‘premium’ (all-air) services, further expanding their revenue in the last year.
“(We) posted record revenue of more than S$500million on the back of higher cross-border eCommerce-related activity” – Client’s business update for full year ending 31 March 2020.
The solution’s resiliency was also tested and proven this year during COVID-19, when countries restricted international air travel and air capacity in the global supply chain was abruptly reduced. Since ocean freight was relatively less affected amidst the pandemic, the customer was able to take advantage of this alternative option provided by PSA Cargo Solutions and diverted more cargo through this intermodal corridor.
Thanks to the successful partnership, the customer now entrusts PSA Cargo Solutions with an expanded scope of services – including cross-border logistics, warehousing solutions, delivery and LCL (less-than-container-load) consolidation.