Logistics Management in Malaysia: Significance of E-commerce and Issues Faced by Logistics and Courier Listed Companies

This report discusses the significance and role of logistics in Malaysia, and how e-commerce is contributing to logistics and courier listed companies. It also highlights the issues faced by logistics and courier listed companies and proposes ways to improve e-commerce logistics in Malaysia.

Running head: Logistics management
Logistics management
2018

Logistics management
Table of Contents
Introduction.................................................................................................................................................3
Answer 1.Significance of e-commerce in logistics companies.....................................................................3
Answer 2. Issues of logistics and courier listed companies in Malaysia......................................................4
Answer 3a. Evaluate the logistic sector in Malaysia....................................................................................7
B.Proposals to improve e-commerce logistics in Malaysia..........................................................................8
Conclusion...................................................................................................................................................8
References.................................................................................................................................................10
2

Logistics management
Introduction
The primary aim of this report is to discuss about the significance and role of logistics in
Malaysia. Further, it explains that how e-commerce is contributing in logistics and courier listed
companies such as Xin Hwa holdings Bhd and Yiwugou ecommerce Sdn Bhd(YESB) in the
country. Issues related to e-commerce and logistic have been drawn in the report. At the end,
some proposals have been given to improve e-commerce logistics in the country.
Answer 1.Significance of e-commerce in logistics companies
E-commerce may be defined as an activity of selling or buying of products on online services or
over the internet. In other words, e-commerce is an online transaction between a client and
supplier. Yes it is true that e-commerce contribute to grow opportunities in local logistics
corporations. E-commerce permits customers to electronically share or exchange products and
services with no issues, concerns and distance. It has been reported from the various studies that
E-commerce organizations that initiated as a tend such as e-bay, Alibaba, and Amazon continue
to make promotes and courageous expenditures into logistics. It is further noted that online
retailers such as goods, ICT, fashion, and electronics have enhanced and improved effectively
and significantly as against to food retailers in the global market (Khurana 2013). For example
GDEX is a growing package delivery services corporation which is attracting big companies like
Japan’s Yamato holdings Co. Ltd and Singapore Post Ltd to take up chunks of share in the firm.
It is seen that the firm is taking benefits of e-commerce success and growth. Since March 17,
logistics stock has increased RM342.6 mil in their combined market capitalizations. Along with
this, executive director Edwin says that logistics counters have already been trending upwards in
line with the e-commerce evolution. Currently, the courier industry renders around 500,000
boxes per day in Malaysia thus, the growth and success of e-commerce can be ignored in the
country. E-commerce mechanisms are generating more demand and developing a pool of
purchasers by rendering promotions to entice purchasers to shop online. In this way, e-commerce
contributes in local logistics companies in Malaysia to fight with competitors. YESB is
principally included in e-business and e-commercial transactions.
3

Logistics management
Since e-commerce activities and business have been constantly increasing, growing and
predicted to grow even more, it is also becoming an effective and primary element on changing
the shape and tends of global logistics companies in the international market. Decisions like
physical location of warehousing and inventory are taken through e-commerce. With effective
and dynamic e-commerce, a unique and strong supply chain would permit a high level and
effective services to be rendered around the channels (Comer 2018). It has been analyzed from
the various studies that managing and handling the delivery process are also a growing and
significantly complex task as delivery place or location from warehousing to physical stores. In
today’s modern world, e-commerce has taken the entire business and marketing sector due to its
constant growth and virtual connectivity (Pandiyan Kaliani Sundram, Razak Ibrahim, and
Chandran Govindaraju 2011, 834-855). Through e-commerce, the companies are able to
eliminate and reduce the geographical limitations, gaining new and innovative customers with
search engine visibility, higher capacity of products and services and reducing the maintenance
costs. It has been found that e-commerce may be a single most significant facet of today’s
modern world (Eid 2011, 78). E-commerce also permits company’s business to scale up easier
and effective than physical retailers because they are not limited by physical limitations and rules
like inventory storage space. This facility further helps in gaining morale and loyalty of the
customers across the globe. Thus, the logistics companies use e-commerce to increase and
improve the accuracy and productivity in the competitive market (Ali, Harlina and Sabariah
2008, 12-13). Kenanga research ensures that there would be effective and adequate time for
integrated logistics leaders that are venturing into e-commerce delivery to mature, as the
predicted launch of the distribution hub under the name of DFTZ initiative for 2019.
Answer 2. Issues of logistics and courier listed companies in Malaysia
It is stated that logistics management in Malaysia helps in distributing the products and services
effectively and efficiently. The key logistic activities include cargo storage and warehousing,
tracking, transshipment, manpower supply, customs brokerage and packaging. It has been found
that the country is using e-commerce and IT facilities in logistic management to stand out over
the rivals in the international market. Outsourcing of logistics services and products are done by
the companies in Malaysia (Aman and Kasimin 2011, 330-344). The logistics and courier
companies expand and explore the business activities and operation in the foreign market with
4

Logistics management
the help of e-commerce. In today’s era, various challenges and issues are being faced by logistics
and courier listed companies that have been drawn below.
 It is stated that there are several players in the logistics sector thus, it may affect the
growth and progress of the firm. Lack of integration and communication among the
transport networks which leads ample of losses in the global market. For example, Tiong
Ham logistics Holdings Bhd is facing earnings pressure in the short time period. Lack of
trend manpower is one of the leading and growing issues that may impact on the
performance and efficiency of the workers. Due to lack of training, the employees fail to
keep an eye on the productivity and efficiency within the organization. All these issues
are being faced by Tiong Ham logistics Holdings Bhd.
 The other example is Pos Malaysia which is a biggest postal delivery service company in
Malaysia also facing various issues while functioning. There is no clear and effective
definition of various leaders and scope of services in the market. It also affects the long
term profitability and results of the firm.
 Labor intensive is another issue that put direct impact on the outcomes and returns of the
logistics and courier listed companies (Shepherd and Shintaro 2015, 444-466).
 It is further analyzed that decreasing operation cost towards attaining competitive edge in
price leadership major issue in logistics and courier listed companies.
 The companies further are unable to create multimodal transport system to conduct
business activities and functions effectively. It reduces profitability and productivity of
the logistics companies (Farahani and Shabnam 2011). All these logistics issues are being
entertained by the logistics and courier listed companies in the country.
To overcome all these issues, the companies need to focus on the logistics and supply chain
management (Willis 2017). Effective strategies are made by the company in Malaysia to
overcome all these issues significantly and effectively. Some of the ways that help to overcome
these issues are discussed below.
 It is analyzed that logistics companies like Pos Malaysia uses innovative strategies to deal
various logistics issues in the country. The firm provides logistics solutions to attain long
term objectives and targets (Inn, 2017). The company uses air cargo logistics with two
5

Logistics management
boeing 737-400 freighters under its feet in order to flourish the business and to handle the
logistics issues.
 Xin Hwa holdings Bhd and Yiwugou ecommerce Sdn Bhd(YESB) highly involved in e-
business and e-commercial transactions. Xin Hwa has made an agreement with Zhejiang
Yiwugou e-commerce Co.Ltd to eradicate and reduce the logistics issues. Xin Hwa
Holding Bhd uses integrated logistics services to save time and cost effectively. It will
help to overcome the issues related to logistics and courier listed companies (Inn, 2017).
 Air transportation mode is used by Xin Hwa holdings Bhd to overcome the logistics and
courier listed companies globally. Apart from this, the firm implements an insurance
policy for each and every order before dispatching from the warehouse. After the various
studies, it has been noted that the companies in Malaysia use proper and adequate mode
of transportation as per the needs and requirements of the customers (Zailani, Azlan and
Herina 2011, 104-113).
 Yiwugou ecommerce Sdn Bhd(YESB) uses proper and effective documentation for every
order which helps in avoiding any difficulty and challenge. It has been portrayed that the
organizations should maintain proper inventory record and data to fulfill the needs,
demands and needs of the customers (Sham, Rasi, Abdamia, Mohamed, and Bibi 2017,
021040).
Some of the recommendations have been given to overcome various issues that are elucidated
below.
 Proper and open communication and cooperation shall be maintained by the leaders and
managers to run the business functions smoothly.
 Proper tracking and recording related to products and services shall be done by the
company to maintain sufficient level of goods and inventory.
 In Malaysia, the organizations should focus on the strategies, policies and approaches of
the competitors to cope with them and to be leaders in the international market.
 The firm shall also focus on the preservation and packaging to avoid and eliminate the
various issues related to courier listed and logistics companies (Zailani, Jeyaraman,
Vengadasan, Premkumar 2012, 330-340).
6

Logistics management
Answer 3a. Evaluate the logistic sector in Malaysia
It has been analyzed that logistics plays a significant role in gaining competitive edge in the
international market. The country is considered as a crucial facilitator of trade. The companies in
Malaysia further emphasize on the logistics sector that helps to maximize profitability and
market share in the competitive market. In 2005, transport, storage, cooperation and
communication services contributed RM23.2 bil. or 8.8 % to GDP (Mordorintelligence 2018).
The logistics service providers and transporters have grown and increased in the country that
helps to boost and uplift returns and revenue in the global market. As a transporter, it is analyzed
that logistics sector is growing in Malaysia rapidly. E-commerce network plays a vital and
empirical role in Malaysia to fulfill the long term objectives and goals of the companies in the
marketplace. Malaysia’s online retail and logistic sector are investing huge amount on the e-
commerce to be a player in the marketplace. It is portrayed that Malaysia’s e-commerce laws and
rules are based on a combination of the electronic commerce act 2006 and the electronic
government activities act 2007. E-commerce is a biggest and dynamic block in logistics in
Malaysia that help in expanding and exploring the business operations in the global market.
Logistics is a activity and process that includes storage, obtainment and shipment of products
and services. It also includes inventory management, billing, warehousing, labeling, packaging
and shipping and so on. In Malaysia, some e-commerce organizations have their own logistics
companies whereas the other look for reliable third party logistics providers and transporters to
render accurate and speed product delivery thereby satisfying and fulfilling the needs and desires
of the customers (Mordorintelligence 2018). E-commerce leaders have started to initiate same
day delivery products and services and they also render free or low shipping choices for
attracting and retaining the majority of the customers across the globe. To manage and handle the
customer request on exchange and return of products, they have used a proper reverse logistics in
the global market. Growing and increasing e-commerce has opened the Malaysian market for
global leaders and these organizations are welcoming this gesture as a market development and
expansion opportunity. It is noted that the digital free trade zone is a key development and
effective action to track and record within the Malaysian e-commerce fulfillment market, as it is
predicted to make Malaysia an e-commerce logistics hub for the region and internationally. In
this way, e-commerce is a fundamental part of logistics companies in Malaysia (Spore 2018).
7

Logistics management
B.Proposals to improve e-commerce logistics in Malaysia
There are various ways to improve and enhance the e-commerce logistics in Malaysia that have
been discussed below.
 The logistics companies need to increase and enhance the internet access and network to
improve e-commerce logistics globally. It will help in determining speedy delivery across
the world hence, the logistics companies can take ample of benefits.
 Domestic suppliers need to be used and the companies further need to increase order
frequency to improve and reduce lead time. An expert team and audit committee shall be
appointed to supervise and monitor the activities and functions of e-commerce logistics.
 Beef up online security shall be done by the companies in Malaysia to overcome the
issues and improve the e-commerce logistic. Online payment must be used to secure
payment (Mohapatra 2013). Various payment methods like cash, mobile payment, credit
card and debit card should be used to enhance the e-commerce.
 Malaysian companies must look towards emerging development and economies of their
e-commerce logistics arrangements, cost, freight management, and usage of technology.
 Huge investment is done by the companies in improving and growing e-commerce
logistics in Malaysia.
 The companies should focus on the online shipping, free shipping and overnight shipping
to develop e-commerce logistics internationally.
 The needs, requirements, choices and preferences of the customers shall be considered
while improving the e-commerce logistics in Malaysia. In this way, the companies in
Malaysia can improve and enhance the e-commerce logistics in the country (Kurnia,
Choudrie, Mahbubur, and Alzougool 2015, 1906-1918).
Conclusion
It is concluded from the above discussion that logistics management plays a vital role in
Malaysia to serve the better services to the customers around the globe. In today’s era, e-
commerce is being used by the companies like Xin Hwa holdings Bhd and Yiwugou ecommerce
Sdn Bhd(YESB) in Malaysia to struggle with competitors and to increase the sale in the global
market. It is analyzed from the above study that organizations face various challenges while
8

Logistics management
using e-commerce therefore innovative strategies are made by the companies to tackle and
overcome on these issues and challenges.
9

Logistics management
References
Ali, Rosena Md, Harlina Suzana Jaafar, and Sabariah Mohamad. 2008. "Logistics and supply
chain in Malaysia: Issues and challenges." In EASTS International Symposium on Sustainable
Transportation incorporating Malaysian Universities Transport Research Forum Conference,
Johor, pp. 12-13.
Aman, Aini, and Hasmiah Kasimin.2011. "E-procurement implementation: a case of Malaysia
government." Transforming Government: People, Process and Policy 5, no. 4, pp. 330-344.
Comer, Douglas E. 2018. The Internet book: everything you need to know about computer
networking and how the Internet works. Chapman and Hall/CRC.
Eid, Mustafa I. 2011. "Determinants of e-commerce customer satisfaction, trust, and loyalty in
Saudi Arabia." Journal of electronic commerce research 12, no. 1, pp. 78.
Farahani, Reza Zanjirani, and Shabnam Rezapour. 2011. Logistics operations and management:
concepts and models. Elsevier.
Inn.T.K.2017. Logistics firms running ahead of fundamentals [Online]. Available from
https://www.thestar.com.my/business/business-news/2017/03/25/logistics-firms-running-ahead-
of-fundamentals/ [Accessed as on 21st November 2018].
Khurana Ajeet. Advanatges and disadvantages of e-commerce, 2013, retrieved from
https://www.thebalancesmb.com/ecommerce-pros-and-cons-1141609
Kurnia, Sherah, Jyoti Choudrie, Rahim Md Mahbubur, and Basil Alzougool.2015. "E-commerce
technology adoption: A Malaysian grocery SME retail sector study." Journal of Business
Research 68, no. 9, pp. 1906-1918.
Mohapatra, Sanjay. 2013. "E-commerce Strategy." In E-Commerce Strategy, Springer, Boston,
MA. pp. 155-171.
10

Logistics management
Mordorintelligence. 2018. Malaysia freight & logistics market, retrieved from
https://www.mordorintelligence.com/industry-reports/malaysia-freight-logistics-market-study
Pandiyan Kaliani Sundram, Veera, Abdul Razak Ibrahim, and V. G. R. Chandran
Govindaraju.2011. "Supply chain management practices in the electronics industry in Malaysia:
Consequences for supply chain performance." Benchmarking: An International Journal 18, no.
6, pp. 834-855.
Sham, Rohana, Raja Zuraidah Rasi, Noranita Abdamia, Suhana Mohamed, and TKM Thahira
Bibi.2017. "Halal Logistics Implementation in Malaysia: A Practical View." In IOP Conference
Series: Materials Science and Engineering, vol. 226, no. 1, pp. 012040. IOP Publishing.
Shepherd, Ben, and Shintaro Hamanaka. 2015. "Overcoming trade logistics challenges: Asia-
Pacific experiences." Asia Pacific Journal of Marketing and Logistics 27, no. 3, pp. 444-466.
Spore. 2018. Transport: Overcoming logistical challenges, retrieved from
http://spore.cta.int/en/article/overcoming-logistical-challenges.html
Willis Neal. 2017. Benefits of integrating e-commerce with logistics, Retrieved from
https://www.re-transfreight.com/blog/benefits-of-integrating-e-commerce-with-logistics
Zailani, Suhaiza, Azlan Amran, and Herina Jumadi.2011. "Green innovation adoption among
logistics service providers in Malaysia: an exploratory study on the managers’
perceptions." International Business Management 5, no. 3, pp. 104-113.
Zailani, Suhaiza, K. Jeyaraman, G. Vengadasan, and R. Premkumar. 2012. "Sustainable supply
chain management (SSCM) in Malaysia: A survey." International Journal of Production
Economics 140, no. 1, pp. 330-340.
11