SATS and Singapore Post (SingPost) are exploring a strategic partnership in the potential establishment of an e-commerce transhipment hub in Singapore.

In a joint statement on Tuesday (Jul 4), they said that they aimed to address a growing demand for e-commerce transhipment by leveraging their combined expertise.

The transhipment hub is expected to shorten delivery times and enhance customer experience.

The companies have signed a memorandum of understanding (MOU) for the proposed hub, which aims to streamline cargo logistics workflows.

This will eliminate the need for transport between Sats and SingPost’s facilities, minimise the reliance on traditional cargo vehicles and optimise warehouse space.

Under the MOU, Sats and SingPost will commit equal shares of resources to engage consultants for business development, explore synergies and conduct trial runs for a feasibility study.

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This is to assess the operational viability of the transhipment hub for both companies.

The first joint operations trial, which took place in February, yielded promising results, the companies said.

This included the potential to shorten cargo turnaround time by over 60 per cent, paving the way for delivery periods for items within Asia to be completed between one and three days.

Sats’ chief executive officer of Gateway Services Bob Chi said the MOU marked a significant milestone for both companies to reduce costs and improve operational performance and customer satisfaction. “This collaborative effort will not only benefit e-commerce players, but also reinforce Singapore’s position as a prominent regional hub for e-commerce logistics.”

Li Yu, SingPost’s CEO of International, said that the postal service provider had been constantly forging deeper industry partnerships to expand its e-commerce supply chains across the Asia-Pacific. “The combined scale of Sats and SingPost will unlock seamless e-commerce flows into, within and out of Asia, building on strategically located hubs in Singapore, and in time to come, Hong Kong and Europe.”

According to projections by McKinsey, the South-east Asian e-commerce market is expected to triple between 2023 and 2026, at a compound growth rate of 22 per cent.

It is estimated that the market will reach about US$230 billion in gross merchandise volume.