Logistics challenges in Singapore retail

January 31, 2018 / By  

Urban logistics play a critical role in ensuring smooth and efficient operations in the retail industry. However, the logistics network and resources are not optimised in the goods delivery process in Singapore.

Different logistics companies fulfil orders of retailers from the same destination individually, using trucks that are often packed with goods that are below capacity for the delivery. Truck drivers depend largely on experience to run the delivery. The lack of advance knowledge in traffic conditions and congestion levels at the unloading bays of malls typically leads to a lengthy and unpredictable last-mile delivery.

The economic impact for the various stakeholders include lost business opportunities by retailers and lower visitorship at malls as a result of road congestion leading to the malls. Logistics companies are also continuously grappling with increasing overheads, driver shortages and the need for timely delivery.

The rapid growth of e-commerce also adds another layer of challenges to the urban logistics framework with the fragmented last-mile delivery and shorter delivery time offered to customers. With the recent Singles’ Day, the overwhelming success of the online sales event led to logistics companies struggling to deliver orders on time and led to the ire of some customers.

To relieve the strain in the current logistics network, two government-led collaborative distribution initiatives – in-mall distribution and offsite consolidation centres – are under pilot tests with participating malls, retailers and logistics companies to arrive at a self-sustaining business model. These new initiatives involve sharing of logistics resources such as drivers, vehicles and warehouses to coordinate the delivery schedule to selected zones, with the aim of improving the overall effectiveness of last-mile delivery for mutual benefit.

Another initiative – a parcel locker system – involves the installation of lockers around Singapore for self-collection by customers. This will reduce house-to-house delivery inefficiencies and will be launched later this year to address the increase in online shopping.

With successful execution, landlords will benefit from better mall images due to less congestion from trucks and better security at malls, while retailers will benefit from timely deliveries and a greater focus on customer service and sales instead of receiving goods whenever a delivery is made. Logistics firms could potentially make deliveries to more destinations due to time saved on last-mile delivery, reduce operational costs and alleviate manpower challenges. There are also environmental and social benefits arising from less pollution and less congestion.

While the participation rate for the launched initiatives has been encouraging, there’s more room for improvement. More effort is needed to help the various stakeholders (government, retailers, landlords, logistics companies and customers) see the benefits of the initiatives, to garner their support and commitment and to understand and address their varying objectives.

It is also important to eventually roll out the initiatives to retailers on a district level instead of a mall level. The success of these initiatives hinges on collaborative efforts among the different stakeholders. Each party plays an essential role to maximise logistics efficiency; a key factor for retail businesses to thrive.

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