Competition in the express delivery segment is expected to intensify later this year with some operators now employing a price cut strategy to attract customers as fuel prices are cooling down.
SET-listed Kerry Express (Thailand) recently reduced the starting price for the delivery of items in a sealed bag "A" (measuring 32 centimetres by 23cm), weighing up to 500 grammes, from 19 baht to 15 baht.
"In this difficult situation with high inflation and fuel prices, we would love to support the Thai people and enable more people to step in to use Kerry services," Alex Ng, chief executive of Kerry Express (Thailand), told the Bangkok Post.
"We are committed to continuing our strong dedication to the market and will continue to give our competitors strong price pressure."
Delivery activities cooled down in the second quarter due to the pandemic and many holidays, but the company had a strong year-on-year volume and market share growth in the quarter.
He said the company is seeing very good delivery activities in the third quarter. "The worst has passed," said Mr Ng.
Cost volatility can be expected in the short run due to the pandemic and fuel prices but the company sees a good delivery trend in June and July, he said.
The company is forging ahead to reach the target of breaking even in the fourth quarter, he added.
Kerry's competitor Flash Express has also announced a 10% discount for the delivery of a parcel weighing up to 1 kilogramme with overall dimensions within 40cm, starting July 16. However, this promotion is due to end Aug 5.
Thailand Post has rolled out a promotion campaign with an EMS starting price of 25 baht from Monday to Saturday and 19 baht on Sunday, down from 32 baht.
However, the company has increased the price of delivery of an envelope weighing more than 10 grammes and a box package to respond to the economic conditions and cost, starting July 6.
Best Express, meanwhile, indicated it had no plans to cut prices as its starting delivery rate of 15 baht for a parcel weighing up to 500g is already low.
According to the Economic Intelligence Center (EIC) of Siam Commercial Bank, the parcel delivery industry in Thailand is expected to grow 17% year-on-year to 106 billion baht in 2022, albeit lower growth than a year before.
The volume of parcels handled by couriers is expected to surpass 7 million per day this year, driven by changes in user behaviour towards online shopping, which has become the new normal.
From 2019-21, the parcel delivery market in Thailand attained a compound annual growth rate of 38% with the value reaching 91 billion baht in 2021, the EIC said.
