When setting up your eCommerce business, choosing your logistics service provider (LSP) to fulfil international deliveries can be a daunting task. With so many private couriers starting up in Southeast Asia and national service providers entering the eCommerce market, digital merchants are spoiled for choice.
Choosing the right LSP can also give you an edge over your competitors by delighting your customers with efficient delivery speeds while keeping your shipping costs low.
But what makes courier service providers different from postal service providers?
In this article, we will break down the main differences between courier service and postal service providers, and listing the pros and cons of using these services in the cross-border eCommerce industry.
Postal service companies are operated by a national governing body. These service providers are run by a government entity and are the most affordable option in getting a parcel delivered to your customer. Examples of postal services include Pos Indonesia, Pos Malaysia, and SingPost (Singapore).
Sending parcels through postal service providers via ordinary mail would not have extensive parcel tracking. They also tend to reach customers at a slower rate, and you would be given an estimated delivery date rather than a hard deadline for the parcel to arrive at your customer’s address.
Nevertheless, you could opt to send it as a registered article. A registered article differs from normal mail in that the receiver will show proof of delivery and have some tracking abilities. In the context of international shipping, the postal service only tracks the parcel within the country until it leaves the country’s borders. Some providers also provide an express service to reach your customers faster, but they also do not specify a hard deadline to reach your customer.
When conducting international shipping with postal services, the origin country’s national postal service would send it off to the destination country’s national postal service. Most of the time, expect tracking and customer service to be done by the country’s respective postal services.
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Private express courier service providers are private logistics service providers that either specialise in one or a few parts of the supply chain (e.g.: first mile, last mile) or provide end-to-end services at a premium rate. Examples of these services include SF express for end-to-end delivery and Roadbull for last-mile delivery.
Because these are operated privately, courier services have the advantage of being faster than postal service providers. Courier companies with end-to-end solutions benefit from having international logistical infrastructures in place to provide more efficient delivery services.
Courier services also have premium features added on, such as:
Track and trace
Delivering to the customer’s doorstep
SMS notifications and/or calling to check if the customer is at home
Insurance and/or compensation for lost or damaged parcels
These added features can give your online business an edge over your e-commerce competitors. For instance, your customers may appreciate the greater levels of customer service whenever they have enquiries on their package.
For international shipping, engaging with an end-to-end courier service provider can also give you and your customers peace of mind because they have the capability to track and trace parcels from your warehouse in the origin country to your customers’ doorstep in the destination country.
However, be prepared to pay additional fees if your customer lives in a remote area or demands a hard deadline for when the shipment should arrive.
The main differences between courier services and postal services can be broken down into the following parts:
Claims for lost/damaged goods
Postal service providers have a definite advantage over courier service providers when it comes to pricing. Due to the Universal Postal Union Treaty, national postal services give each other heavily discounted rates on international mail, and they include all ASEAN member states.1 This makes postal service the cheaper option for shipping internationally.
However, like the old adage “you get what you pay for”, you may run into problems like lost parcels and a slow delivery time, which will drive away customers and affect your brand in the long run.
Courier services, on the other hand, have a premium price tag for end-to-end features in international deliveries. They may have surcharges on exceptional circumstances where you have to be ready to bear the costs. For instance, delivering to rural areas will cost more due to its inaccessibility.
Packages sent via postal services are only given an estimated time frame on when your customer can expect the parcel to arrive. This means that time-sensitive parcels may not be able to arrive at your customer’s doorstep in time for their special occasion, putting a damper on the customer’s mood and affecting your brand image as well.
On the other hand, courier services can give the option for customers to specify the timing they want to receive the package. As a merchant, you can then check with the LSP to ensure that someone had already signed and collected the package.
When shipping internationally, the disadvantage of using a postal service is amplified because tracking is done by separate postal services within their respective countries, thus making communications to LSPs difficult if the packet is lost in transition or stuck in customs, and not under each other’s domain.
Conversely, courier services can track from end-to-end, giving updates on the parcel’s location in every step of the process. Courier services that provide live tracking updates allow your customers to view the progress of their delivery online and can give them a peace of mind, saving you time in communicating between your customer and the LSP.
It comes as no surprise that service quality from private couriers, especially end-to-end ones, would fare better than postal services. Their in-house customer service team would be more aware of what’s happening on the ground, whereas postal service customer teams could be outsourced and would not have on-the-ground information to answer specific customer enquiries.
Network coverage can also make or break the service quality of LSPs. In some cases, postal services can deliver effectively in hard to reach rural areas if private couriers don’t have an extensive local network.
However, courier services have an edge against postal services when it comes to dealing with cross-border shipping. Private couriers could have their own fleets, or favorable tie ups with air freight providers, to cover international shipping from one country to another, making it faster than postal services which depend on national carriers to take parcels to destination countries.
Ordinary postal services usually do not give compensation for lost or damaged goods. However, with paid add-ons, lost or damaged parcels have a capped claimable amount. Thus, the add-ons may not be worth it if you’re shipping an expensive piece of equipment like a smartphone. In SingPost’s example, their claims are up to $150 for SpeedPost priority.2
Because end-to-end courier services are held accountable for the delivery in every step of the way, they usually have a claims department to handle cases ranging from lost or damaged goods to late delivery as well. These companies do require merchants to produce a few documents such as a proof of purchase, photographic evidence from your customers, and shipping documents like the waybill, to facilitate the claims process.
One way to save on shipping is to mix and match different types of courier services to meet your different delivery needs. However, the cost savings you have in handpicking your shipping partners could cost you in the time taken in researching and managing your LSPs.
Alternatively, you could look into integrated LSPs (aka 4th party logistics providers/4PL) who can customise solutions for you depending on your business needs. 4PLs differ from 3PLs in that they might not necessarily own their own fleet or freight carriers, but they partner up with numerous 3PLs that specialise in one or more areas, and provide integrated, end-to-end, supply chain solutions.
A key advantage of a 4PL’s network would be the extensive reach and capacity available, as a single 4PL can provide access to entire regions through its vast network. At the same time, a 4PL would have excess capacity to meet shipping demand as a 4PL would work with numerous providers, rather than be limited by the physical capacity of working with a single 3PL.
By selecting a 4PL as your international shipping partner, the 4PL can arrange for the most suitable 3PLs in their network to meet your eCommerce delivery needs. The cost of shipping with a 4PL tends to be more competitive than when working with a traditional end-to-end 3PL. Additionally, 4PLs have technological solutions to help them track and trace shipments from end-to-end, holding all partners accountable during the whole delivery process.
These differences highlighted act mostly as a general guide. Aside from comparing the costs and services provided by courier and postal services, you should also be looking out for other factors like network coverage, local presence, and a reliable tracking system when choosing your international shipping provider.
When you’re first starting out in your international eCommerce business, there are pros and cons to each type of LSP. Courier services and postal services differ in terms of pricing, delivery time, tracking systems, customer service, network coverage, and ability to process claims. Alternatively, engaging a 4PL could net you savings for your international logistics operations by reducing the opportunity costs in researching and managing courier services.
In the end, it always pays to understand your logistics needs and the desired delivery experience you want to give to your customer. By taking the time to research the type of shipping partner that suits your needs, you can provide great service which also doesn’t break the bank.
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If you’d like to find out more about how we can solve your SEA eCommerce cross-border delivery needs, come and have a conversation with us.
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