Postal enterprises face 'storm' of competition

December 29, 2022 | 16:42
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According to a Ministry of Information and Communications (MIC) report to summarise work in 2022 and outline plans for 2023 released on December 18, the postal sector’s revenue in 2022 is estimated at $2.27 billion, up 16.2 per cent compared to last year, exceeding plans by 2.5 per cent.

At the end of November 2022, the number of active accounts on the two e-commerce platforms, PostMart and VoSo, was 7.5 million accounts, a seven-fold increase compared to the figure for 2021.

Meanwhile, at the end of November 2022, the number of transactions on PostMart and VoSo hit 1,289,439 transactions, an increase of over 16-fold compared to 2021.

However, two leading enterprises in the postal sector saw a slowdown in revenue and profit. In 2022, at Vietnam Post Corporation (VNPost), revenue is expected to touch about $1.06 billion, equal to 73.1 per cent of the plan assigned by MIC and 93.7 per cent of the result in 2021.

VNPost ‘s pre-tax profit in 2022 is expected to reach $23.9 million, equal to 91.7 per cent of the plan assigned by the MIC and 86.9 per cent of the figure in 2021.

Viettel Post Corporation’s total revenue is about $923 million, up 9.5 per cent year-on-year. Its pre-tax profit is estimated to reach $16.9 million, up 5.2 year-on-year.

According to the MIC, the postal sector in 2022 has faced many difficulties. In which, some businesses have taken advantage of discounts and promotions to provide postal services at low prices, even below cost, leading to unfair competition.

“The number of new postal enterprises entering the market increased by 12 per cent, but most were small businesses with low competitiveness. The quality of postal and delivery services, especially in e-commerce, has improved thanks to the application of technology, but the phenomenon of sending contraband and prohibited goods by post exists," according to the MIC’s assessment.

In recent years, domestic postal enterprises have been increasingly struggling because many cross-border delivery companies franchise, expand the market, and increase the competition for market share. Some foreign-owned enterprises and franchises have thrived in the past year, such as BEST Express, J&T Express, Kerry Express, Shopee Express, Lazada Express, and Giaohangtietkiem.JSC, GHN Express, Fast Delivery, Ninjavan, and Ahamove.

According to Minister of Information and Communications Nguyen Manh Hung, Vietnam currently has more than 800 enterprises in the postal sector. The enterprises face many difficulties due to reduced service revenue and changing customer needs. Unfair competition among enterprises also has affected the general market.

Postal enterprises face 'storm' of competition

Sanctioning unfair competition

Responding to these difficulties, the MIC has proposed coordinating with the Ministry of Industry and Trade and agencies to strictly implement the provisions of the Law on Competition for postal enterprises, strictly sanctioning acts of unfair competition, dumping, selling below-cost, and promotion beyond the prescribed time.

In addition, the MIC will continue to review, research, and propose to amend licensing conditions for postal service providers, improving the competitiveness of postal enterprises and the quality of postal services and ensuring the safety and security of postal items.

The ministry will also strengthen inspection and supervision to detect violations of postal enterprises, thereby promptly handling them. At the same time, it will focus on assessing enterprise compliance with standards and regulations on the quality of postal services, promptly amending, supplementing, and updating standards.

Chu Quang Hao, general director of VNPost, said that in 2023, the corporation would expand its business and provide breakthrough services, aiming to lead the market. As well as promoting digital transformation, VNPost will focus on modernising physical infrastructure, deploying a sharing economy model, and improving the scale of network infrastructure.

To improve its competitiveness, in 2023, Viettel Post plans to invest further in conveyor systems in Hanoi and Ho Chi Minh City, invest in 100 to 200 North-South transport vehicles, and put into trial cold storage services and warehousing services.

Viettel Post will continue to optimise work processes flow, connection infrastructure, and technology infrastructure to shorten the whole process time of parcels to provide 6 to 12 hours of intra-provincial services and 12 to 24 hours of local service.

“Besides improving the quality of domestic and international delivery, Viettel Post will continue to invest and expand its business to become the leading delivery enterprise in Vietnam based on high technology," said a representative of Viettel Post.

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