Kurier Nasional eyes 5pc of market by 2004.
By Vasantha Ganesan
KURIER Nasional Sdn Bhd, the Malaysian master franchise holder of New Zealand-based Fastway Couriers, expects to corner 5 per cent of the local courier industry, currently valued at RM1 billion, in three years.
Its managing director Awalan Abdul Aziz estimates that the industry will grow at about 20 per cent a year and by 2004 should be worth RM1.46 billion, with Kurier's share being RM73 million.
Kurier was established in February 2000 and officially started operations in January this year. Fastway was formed in 1983 and has eight master franchisees globally today.
Fastway Couriers itself is part of the Fastway Global group which operates a network of 51 master regional franchisees and more than 1,200 courier franchisees. The group posted a turnover of A$150 million (A$1 = RM2.00) for the financial year ended March 31 2001.
Awalan is confident that Kurier will do well despite entering an apparently crowded market. At the last count, 114 courier companies are registered with the Postal Department.
Although about 20 per cent of them are inactive, the ranks include at least 20 companies which are major players at the national level and 10 internationally.
One thing that Kurier is banking on is competitive pricing and the fact that it is the only private courier company in Malaysia to run a prepaid system.
"We have one of the lowest rates in the market… which customers can enjoy by purchasing bar code labels and satchels prior to use," Awalan told Business Times in an interview.
For the customers, the system allows better control of expenditure, and for Kurier it eliminates credit management issues which means the company can offer better pricing, he said.
Most courier companies' charges are based on weight of the packages, for example 500g, 1kg, 2 kg and onwards. Parcels in Malaysia average 6kg to 7kg in weight, and service costs of between RM20 and RM32.
In contrast, Kurier charges a flat rate of as low as RM5.50 for packages up to 15kg, Awalan said.
As for customer satisfaction, the company offers what it calls an AMPM service, meaning within designated areas parcels picked up in the morning will be delivered in the afternoon the same day.
Asked about the threat to the industry posed by the Internet revolution and growing acceptance of electronic signatures, Awalan said this was one reason why Kurier's focus is parcel delivery rather documents.
Kurier is targeting having a total of 21 regional Fastway franchisees who will basically run the depot offices and appoint couriers to execute pick-ups and deliveries.
By year-end, 14 of these regional franchisees will be up and running, supported by 100 contracted couriers. And by end-2002, all 21 regional franchisees involving 350 licensed couriers will have been appointed.
A year later, the entire Fastway network will be fully operational.
"Therefore, within three years we will be able to deliver anywhere in Malaysia," Awalan said.
An advantage of the Fastway system is that the franchisee doing the pick-up, delivery and sale of labels and satchels will also be involved in marketing the services by handing out brochures, and answering queries or make presentations to prospective clients.
Since the regional franchisees and courier franchisees are owners of their enterprises as opposed to being employees of a company, they will be more inclined to develop their business and promote customer relations, Awalan added.
For a regional franchise some RM350,000 to RM700,000 in investment is required, depending on size of operation and location, to pay the franchise establishment fee, set up the depot and use as working capital.
A courier franchisee needs about RM50,000 and RM60,000 for establishment fee, deposit and working capital.
According to Awalan, the franchise agreement guarantees the courier franchisee of a minimum income of RM5,000 per month for the first five months.
The guarantee works on what Awalan described as a "top-up" basis. The RM25,000 which a courier franchisee pays as establishment fee will be placed in a trust fund, from which any shortfall in income in the first five months will be tapped.
At the end of the five-month period, 91 per cent of the remaining amount will go the regional franchise, 8 per cent to Kurier and 1 per cent to franchisor Fastway.
The regional franchisee will use the money to help the courier franchisee develop his business.
Kurier also prides in itself for being the only local company to offer the "track and trace" system accessible online through their website at www.fastway.com.my.
To date, about RM2.5 million has been pumped into Kurier and the company expects to break even by end-2002 and to post profits a year later.
"Research has shown that courier companies come and go. The bottom line is competitiveness and network… the needs of the customers must be understood and met."
