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E-commerce boom drives courier business

Muzaffar Rizvi/Dubai
Filed on November 7, 2020
The courier, express and parcel market in the UAE is expected to post a 7.5 per cent compound annual growth rate between 2020 to 2025.

The growing popularity of e-commerce in the region and rising international trade will drive the growth momentum in the CEP market during next five years.

Courier companies operating in the UAE see a promising outlook despite the challenging environment and said the industry will continue to flourish in the wake of the e-commerce boom in the region.

Leading players and the industry regulator said online shopping not only generated demand for courier services but also created business opportunities and boosted operations for some existing courier companies.

“We have seen an increase in demand for last mile deliveries in 2020 and expect this trend to continue into 2021,” said a spokesperson for Emirates Post.

“At Emirates Post, we have increased our ecommerce parcel delivery capacity due to the higher number of online orders placed by UAE consumers. With this, we are supporting ecommerce growth with tailored solutions and our focus is on last-mile delivery.

“We firmly believe that continued growth for our sector depends on paying attention to our customers, maintaining cost-efficiencies, increasing convenience, and diversifying our product,” the spokesperson said.

Balancing market

Sachin Gupta, general manager of Gulf Pinnacle Investments (GPI), the UAE subsidiary of Gulf Pinnacle Logistics, the owner of the Century Express Courier Services, said there is a spike in the e-commerce sector but at the same time there is a drop in corporate accounts as many are migrating to e-invoicing and bank transfers, thereby reducing the role of couriers’ companies for cheque collections etc.

“We see a tremendous growth in the courier industry requirements in the coming years,” Gupta said.

The latest research data released by Mordor Intelligence, said that the courier, express and parcel (CEP) market in the UAE is expected to post a 7.5 per cent compound annual growth rate between 2020 to 2025. The study said that the growing popularity of e-commerce in the region and rising international trade will drive the growth momentum in the CEP market during next five years.

DHL reimposes trust

DHL expressed full confidence in the growing domestic courier business and said UAE is one of DHL’s key markets in the region and it will continue to invest in the country.

“We will continue to invest in our local infrastructure, air and road capabilities to meet the ever-growing demand of the market and the future needs of our customers. Our expansion strategy is aligned to the UAE’s economic vision which endeavours to strengthen the logistics industry and as the region’s leading logistics players, DHL’s focus remains on helping to boost trade links between the UAE and significant commerce hubs around the world,” Geoff Walsh, country manager at DHL Express UAE.

“One of DHL’s upcoming investments is the new 40-million euro airside facility in Abu Dhabi that is planned to be operational in 2022. This new addition to our already extensive infrastructure and network will enhance our handling capacity and processing capabilities for a faster, more efficient service helping our customers connect to the rest of the world even faster.

“We will continue to review the market and stay ahead of the curve in making investments to support our global strategy connecting people and improving lives,” he said.

Regulations, monitoring

Gupta pointed out that many private companies operating without any licence for the courier business. In addition, some delivery companies, starting with a minimal licensing fee, have penetrated into the courier industry market taking away a major share of the business as they operate with a minimal cost thereby offering rates far cheaper to customers compared to the registered courier companies.

“The licensing authority should strictly monitor these companies operating with no licence. Moreover, many private individuals operate in delivery activities with absolutely no cost but their petrol expenses."

Pandemic impact

The spokesperson for Emirates Post said the company’s international business faced the biggest challenge as connecting line hauls between countries was affected with the suspension of flights due to the pandemic. Steps were taken, however, to reroute material via freighter, sea, and other air options.

“We have been able to restore international postal operations to many countries and continue to work with our postal partners to resume services to all destinations,” he said.

To a question, he said some customers do not provide all the necessary information and full address for inbound shipments, which hinders the delivery process.

“We recommend that they diligently fill in their details to guarantee that their shipments arrive in the UAE and they can be easily contacted to arrange for delivery. Additionally, we should raise customers’ awareness regarding the international shipping guidelines of some ecommerce sites,” the spokesperson said.

Lockdown challenges

Emirates Post Group said businesses across various industries are facing certain challenges in the wake of the Covid-19 pandemic.

“We did witness an increased interest from companies about introducing courier services to their operations due to the increased demand in online shopping. The same demand created opportunities and boosted operations for some existing courier companies,” the spokesperson of Emirates Post Group said.

“As enablers to the courier industry, we are working closely with the economic development departments across the nation and the relevant authorities to support courier companies with the recent changes and to facilitate their business growth. In turn, we ask that they continue to comply with the laws and regulations of the UAE to ensure quality, safety and security of their businesses and customers,” the spokesperson said.

Industry seeks one unified licence for UAE

Emirates Post Group, regulator of the UAE’s courier industry, said the courier licence issued by Emirates Post Group is valid across the UAE and is linked to the courier company’s trade licence.

“We work closely with the economic development departments of each emirate to streamline the issuance of courier licences and have automated the process online for added convenience,” said a spokesperson from the regulatory arm of Emirates Post Group.

The spokesperson clarified that a courier company in the UAE needs to acquire a separate licence if it wants to expand its business in other emirates.

Some industry stakeholders said courier firms in the UAE have to pay an additional amount to secure licence to operate in Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain.

“This is certainly an additional expense on the courier companies who besides paying a heavy fee for an annual licence has to pay an additional cost to each emirate,” they said.

Emirates Post Group’s spokesperson iterated that the courier licence issued by the group is valid across the UAE allowing the company to perform deliveries to all emirates.

“In the case that a courier company wants to expand its business and open another office or branch outside of the issuing emirate of their trade licence, this is then subject to the rules and regulations of the emirate they wish to open a new office/branch in. Our role is to support the courier company by issuing a no objection certificate (NOC) to their new trade licence,” the spokesperson told Khaleej Times.

Elaborating, the spokesperson said if a company is based in Dubai, it can perform deliveries across all emirates. When this company wants to open a branch in Sharjah, then it needs to liaise with the economic department in Sharjah and possibly acquire a new trade licence. In this case, Emirates Post Group will issue a no objection letter to facilitate the process, the Emirates Post Group’s spokesperson said.

-- muzaffarrizvi@khaleejtimes.com





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