THE e-commerce boom in the wake of Covid-19 has spiked demand for express delivery and warehouse space, fuelling bottom lines of logistics companies and driving expansions.
A case in point is Tasco Bhd, which closed its financial year ended March 31,2021 (FY21) with record-high profitability that rose four times to RM41.27mil.
As Covid-19 forced people to stay at home, one of the main challenges for businesses wanting to take advantage of e-commerce is finding ways to fulfill orders more quickly. With supply chains disrupted, one way out for businesses was stocking goods ahead of time, says Tasco group chief executive officer, Andy Lee Wan Kai.
“We have witnessed a surge in demand in all our business segments, but especially in international airfreight and sea freight segments, as well as our contract logistics business.
There’s also an increase in requests for warehouse space due to abnormality within the global supply chain and also the need to keep higher buffer stock to ensure non-interruption of production due to Covid-19 risk factors, ” he tells StarBizweek. He says that during the first movement control order (MCO) from March 18- May 3,2020, there was strong demand for cold-chain and convenience retail logistics to cater for the handling of food and pharmaceutical goods. This mitigated the impact of the MCO.
“Moving from that period, as our customers re-started their operations, our business volume experienced a surge resulting in a V-shape recovery from the month of June 2020 onwards until to-date, ” Lee adds, pointing out that the group’s top line expanded some 30% from organic growth year-on-year in FY21.
Tasco is involved in contract logistics, air freight forwarding, trucking, ocean freight forwarding, and cold supply chain logistics, where it is a leading player with about 35% market share.
Last month, the group announced it is expanding to East Malaysia and Kalimantan area via the acquisition of Hypercold Logistic Sdn Bhd, which has the largest cold chain warehouse capacity as well as eight temperature controlled trucks in Sabah.
The acquisition, slated to be completed in the second quarter of this year, will raise Tasco’s capacity to 53,000-56,000 pallets – cementing its lead position in the transportation of temperature sensitive products.
Lee says, while the group is on the look-out for mergers & acquisitions, there is nothing concrete at the moment.
Where organic growth is concerned, it plans to invest around RM400mil over the next five years to cater for its next phase of growth.
“These expansion plans will be more focused on warehousing capacity at strategic locations that we have identified as well as increase our vehicle fleet for port haulage business, ” says Lee.
The issue is can the pandemic-fueled boost last when things eventually normalise?
For now, the lockdown rules are still not relaxed completely and the fear of outdoor shopping and virus transmission remains.
Post-pandemic, players in the industry are confident that the digital format of doing business is here to stay.
While the shift from offline to online, in particular for individual shopping, is becoming a habit for consumers, the workplace has also transformed.
Read More: Surge in demand for logistics, e-commerce