Chinese logistics firm Best, backed by e-commerce powerhouse Alibaba (NYSE: BABA), announced on Thursday plans for the expansion of its operations to Malaysia, Cambodia, and Singapore, marching into one of the region’s fastest-growing and most investment-luring industries.
The delivery service provider will build 12 sortation centers and around 400 service stations across these three countries over the next three years. Two customized flagship sortation centers, equipped with automatic sorting lines and dimension-weight-scanning systems, will be established in Malaysia’s capital, Kuala Lumpur, and Cambodia’s capital Phnom Penh, according to the company’s press release.
“We are excited to develop our logistics networks in Southeast Asia, a key focus area of our global strategy,” said Johnny Chou, CEO and founder of Best.
“We are confident that our technology-enabled logistics services and high-quality express delivery options will be a critical service component for both merchants and consumers, during both this difficult period and beyond it,” he said, adding that the COVID-19 pandemic amplified consumers’ reliance on e-commerce and created larger potential opportunities in the region.
Best brought its services to Thailand and Vietnam in 2019, where it has gained substantial growth. By the end of March, the company established eight sortation centers, 379 stations, and more than 2,000 delivery personnel, offering next-day delivery options for major areas in Thailand, such as Bangkok.
In Vietnam, the firm has seven sortation centers, 367 stations, and 2,500 deliverymen, enabling same-day deliveries in Ho Chi Minh City and Hanoi, the company told KrASIA. It also plans to launch freight delivery and truckload capacity brokerage services in Indonesia and the Philippines in the near future.
In total, the company shipped 8.8 million parcels in the region in the first quarter this year, up from 237,000 parcels one year earlier, representing a 3,624.3% year-on-year increase, according to the firm.
However, Best’s numbers fall short compared to one of the region’s largest players, Ninja Van, which claims a daily delivery volume of over a million parcels. The Singapore-based startup operates in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam—all markets highly overlapped with Best. The USD 750 million-valued Ninja Van just bagged in another USD 279 million in funding in May, as the pandemic boosted online shopping among home-holed people, KrASIA reported.
Operating logistics services in the archipelagic region are costly due to geography, poor infrastructure and low internet connectivity. However, as the e-commerce industry matures, logistics is considered one of the next emerging industries, with other existing players like Lalamove, JNE, J&T, Sicepat, Gojek, and Grab, vying for more presence.