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'Our course is set,' says SingPost's new chief executive
NEW Singapore Post (SingPost) chief executive Paul Coutts was under no illusions about the situation he was inheriting at the company when he joined it on June 1.
He told The Business Times: "I was, obviously, aware that the company was having some issues at that point in time." These included a big impairment on a United States e-commerce unit, a ratings downgrade from Standard & Poor's and corporate governance lapses flagged in a special audit.
When he took the job, he was replacing Wolfgang Baier, who now heads cosmetics distributor Luxasia.
Mr Coutts, 61, was from Toll Global Forwarding, where he had been chief executive since 2013.
Half a year into the job, he has overseen a strategic review of the company, which is now working to implement its updated transformation plans with an eye on the e-commerce and logistics business. But what that might mean for the company's role as a national postman remains uncertain.
"We've been open about the fact that we are seeing a high single-digit decline in mail volumes as an organisation. With regard to whether that's going to stabilise, or whether it's going to accelerate, it's unknown."
Coming soon on the postal front is a rate hike in the international terminal dues system, which governs the processing costs of cross-border mail. This kicks in on Jan 1.
SingPost, which has said that "mitigating measures are being put in place", last week announced that it would introduce a new rate structure for small packets headed overseas by air mail; these are now part of a postage fee schedule that includes letters and printed material.
DBS analysts said on Monday that with a new minimum chargeable weight of 100g for small packets, "SingPost will benefit from increased minimum postal rates, as well as higher postage rates for the lighter small packets, which we believe form the bulk of small-packet volumes".
But, referring to the higher rates that SingPost will have to pay to its foreign postman counterparts, Mr Coutts said: "The real impact probably won't be felt until we get into the end of the first quarter, maybe the second quarter, of next year."
Another plan still underway is the rescue of TradeGlobal, the beleaguered Cincinnati-based e-commerce company that SingPost picked up in 2015. In May, the unit laid off 112 workers, a development prompted by a major customer in the fashion retail industry filing for bankruptcy.
SingPost has said it is working "to recover as much value as possible for shareholders and to focus on extracting post-acquisition synergies" across its e-commerce businesses.
Mr Coutts told BT that a disposal of TradeGlobal is not on the cards. "We're now in our seventh month of the turnaround plan. We are on track for that, which we're pleased about."
He said: "We literally are managing this on a week-by-week, month-by-month basis... We continue to watch it very carefully."
Both of SingPost's US units are now under one boss - Paul Demirdjian, chief executive of SingPost subsidiary Jagged Peak. The reshuffle came after Marcelo Wesseler, chief executive of SingPost's SP Commerce division, resigned in March this year.
Mr Coutts hailed SingPost's close relationship with the Alibaba Group, saying it was a boon for e-commerce logistics opportunities. He said the Chinese conglomerate was "not only as a key shareholder... but also as a key customer, a key partner with us". "It's also about how they have a lot of strengths, a lot of capability and infrastructure built around Big Data, around artificial intelligence, around warehouse robotics. Those are exciting areas for us as well.
"That may also be the strength of Singtel as a shareholder as well, which has, of course, built Big Data enterprises." Singtel is SingPost's biggest shareholder, with a 21.79 per cent stake; Alibaba is the next largest, with an interest of 14.45 per cent.
To that end, SingPost continues to tap infrastructure investment for growth, both in Singapore and South-east Asia, said Mr Coutts. The company's goal of building up its footprint in e-commerce logistics pre-dated his arrival, so "it wasn't as though we were starting from scratch".
"Clearly, we had to update our strategy. So we've now finalised our strategy. Our course is set."