Meteoric rise of courier business amid pandemic

Infograph: TBS

With a target of having a small slice of the slowly-growing courier service business, a startup named Delivery Tiger started its journey in 2019. The company saw its big break after a few months when the Covid-19 pandemic broke out across the country.

"We never thought that Delivery Tiger would get such a good number of customers in just a few months. The pandemic changed everything. For shopping, customers shifted online so fast that established courier service providers struggled to meet the rapidly surged demand," said Fahim Mashroor, chief executive officer of Delivery Tiger.

"The situation was a boon for us and helped us grow fast although we were just a startup then," he told The Business Standard.

Take another courier company Excelsior Express that started operation in 1986 with only business-to-business delivery services. It started serving end customers during Covid-induced lockdowns and restrictions.

Capitalising on the meteoric rise in delivery services amid the new normal, many others made their entry to the sector. As a result, the number of companies providing courier services in the country has jumped to 500 this year from only 130 in 2019, according to the Courier Services Association of Bangladesh.

"Besides, many existing players expanded their businesses, went for automation, increased capacity and started serving individual customers apart from business customers," Hafizur Rahmah Pulok, president of the association, said while talking to The Business Standard recently.

Some Tk5,000 crore has so far been invested in the sector that created 1 lakh direct and 4 lakh indirect jobs, he said and hoped that the sector will continue to see an annual growth of around 20%. 

"We still have huge business potential. We can expand our services further in remote areas. Even rolling out international courier services is impossible for us," Hafizur Rahmah Pulok stated and noted that couriers are helping all kinds of businesses deliver their products or get raw materials on time.

"However, we need more investment for logistics and capacity building." 

Commencement in 1983

The country saw the commencement of private-run courier services in 1983 with the entrance of three companies – Sundarban, Continental and Dreamland.

"The state-run postal department, however, opposed the launching of the companies and filed a lawsuit terming their operations illegal. In the legal battle, the verdict went in favour of the private courier services", said Pulok.

Since then, the private sector courier business has been growing, he added.  

Top players

The oldest Sundarban Courier Service is now the largest player in the sector with around 40% market shares, followed by SA Paribahan, Karatoa, RedX and Janani Express, according to the Courier Services Association of Bangladesh. 

All the couriers together deliver around 7.5 lakh parcels per day on average, while Sundarban alone makes some 3 lakh deliveries, said Nurul Islam, office secretary of the association. 

"We have secured the top position as we emphasised state-of-the-art technologies in our services since the inception," said Hafizur Rahman Pulok, also vice-chairman of Sundarban Courier. 

Couriers now more trusted

Courier service providers had to spend a great deal of time to gain people's trust regarding their product safety. "Once our delivery was only business to business, not person to person or home delivery. The end-customer level service started after a long time and it kept growing keeping pace with the growth of e-commerce," said Nurul Islam, adding that the growing trust of people gave a boost to the sector. 

For sustainability, many companies emphasised scanning parcels before processing deliveries. They installed scanners to ensure that no one can send drugs or other illegal parcels, he explained. 

"Besides, we have taken steps to bring all the transactions under the banking system to check irregularities. To this end, we had a meeting with the Bangladesh Bank in October last," the office secretary noted.

Challenges for couriers

Despite the growth and potential, courier companies face some challenges. 

"Although we are installing scanning machines to identify illegal parcels, smugglers are switching to new methods to bypass our security system", said Courier Services Association President Hafizur Rahmah Pulok.

"If any parcel is seized by law enforcers, our innocent officers are subjected to harassment."

Moreover, the price of scanning machines is very high, minimum Tk50 lakh to Tk5 crore, which everyone cannot afford, he further said.

"Besides, our annual licence renewal fees are so high, from Tk50,000 to Tk5 lakh. On top of that, the authorities are charging service charges from us without providing any service." 

"Another big frustration is that courier business is not listed in the service industry, which is why we are deprived of many benefits including tax rebate," added Pulok.