Singapore Post opens new e-commerce logistics hub

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SingPost’s new e-commerce logistics hub can process online orders in 5-10 minutes.

SINGAPORE — Singapore Post opened a new logistics center dedicated to e-commerce in the east of Singapore on Tuesday. The center, costing 182 million Singapore dollars ($130 million), will serve as a hub for sorting and shipping out merchandise ordered online to Southeast Asia and beyond.

The logistics hub of about 51,300 square meters will employ automation that will sort up to 100,000 parcels a day for delivery to worldwide destinations. The time required for picking, packing and sending the parcels to loading docks is 5-10 minutes, according to the company.

In an opening ceremony on Tuesday, SingPost Chairman Simon Israel revealed plans to upgrade the facility with more advanced technology. "We have designed this facility to be able to meet the future demands … through adoption of automation and soon, the use of robots," Israel said, adding that a postman in the future may be "a programmer of driverless vehicles, a controller of robots … or a flier of drones."

The opening of the new facility comes not long after the completion of a S$86.2 million investment by Chinese e-commerce giant Alibaba Group Holding into Quantium Solutions International, a logistics joint venture between Alibaba and SingPost. Alibaba’s additional investment of S$187.1 million to parent company SingPost has also been approved by Singapore’s regulatory body, said the postal company last Thursday.

The two deals were announced in July 2015, but since then, SingPost had suffered a series of corporate governance scandals, including the sudden departure of its former CEO and disclosure shortfalls for past acquisition transactions. The delay in Alibaba’s investments had kept the investors on edge until the announcement last week, after which SingPost’s share price jumped. The counter closed at S$1.62 on Tuesday, 6.6% higher than the closing price last Thursday.

Maybank Kim Eng analyst John Cheong maintained a "buy" rating on SingPost in a recent report, noting that the green light on Alibaba deals "should remove the overhang on the stock and potentially enable SingPost to capture more e-commerce logistics businesses from Alibaba."

Using the new facility and the partnership with Alibaba, SingPost hopes to attract more brands and online retailers onto its logistics platform. The company has been upping its international portfolio of e-commerce backend services, including the acquisition of two companies in the U.S. announced late 2015.

The new hub will be used for domestic e-commerce deliveries as well, including deliveries to SingPost’s POPStation, self-service lockers for deliveries. The successful expansion of POPStation has prompted the government to set up a similar system. Speaking at the opening ceremony, Deputy Prime Minister Thaman Shanmugaratnam announced the government would roll out a nation-wide locker system next year at public housing estates, where around 80% of Singaporean residents live.