Singapore Post Limited (S08) Earnings Call Transcript & Summary

So welcome to the results briefing for SingPost this FY. This session is webcast live and will be recorded for playback purposes. Let me introduce the management on the panel today. We have Vincent Phang, our Group CEO; on his right, Group CFO, Vincent Yik; and Michelle Lee, Head of Corporate Services and Sustainability. On Vincent Phang's left is Ms. Neo Su Yin, CEO for Singapore; Li Yu, CEO for International; and Eng Keat, our Head of Strategy. So I'll hand over to Vincent to start the session.

Yes, thank you. Hope everybody can hear me, and good morning, everyone. Welcome to our results briefing and great you can join us for those who are here physically, good morning to you again. Now coming out of the pandemic over the last year, our theme for the year was always about growth and positioning ourselves for the future, while addressing the continued challenge of postal decline. So some key highlights for the year. I think we didn't introduce our Australian colleagues, so just to cover off. That's Simon Slagter, who's the CEO of FMH; and Richard Thame, the CEO of CouriersPlease. So they're joining us from Sydney and -- Melbourne and Sydney. So let me carry on. So some key highlights for the year. On the financials, you will see that our diversification has guided us new revenue streams in Australia and logistics and on the basis, record revenue for the year. Post and Parcel recorded its first ever full-year loss after many years of decline. Operationally, we have structured the organization for the future. We are building our networks and markets, enhancing our technology abilities and strengthening our sustainability practices. We have successfully executed the first phase of our transformation to diversify the business, expanding in Australia and focusing on cross-border e-commerce logistics. This now gives us optionalities for the next phase of our [ transformation ]. SingPost has evolved over the years, and today, we're in a stronger position. Our diversification into logistics and overseas markets give the results, positioning us for growth. The impact of the structural decline in letter mail was always inevitable, and we had to make plans for that. We are leveraging technology for growth. In Australia, we're already the leading digitally enabled 4PL operator. We will continue to build on the digital core across our organization and business. Our corporate purpose has guided us, which is making every delivery count for people and planet. We continue to raise the bar on our governance and environmental responsibilities. SingPost is certainly a different company now. Logistics revenue has continued to grow from [ 60% ] to 71% over the year. This has become our largest business segment. 86% of our group's revenue was generated internationally with Australia being our biggest contributor. And we expect this to continue to increase as we grow internationally. If you compare that with just a few years ago, our financial performance was then predominantly driven by postal [indiscernible]. And that is the result of our successful execution of our growth strategy as we meet the challenge of the structural postal decline hit on. We made good headway in our strategic initiatives. I'll cover our achievements broadly in these 3 areas. First, we are repositioning for growth. We have structured the organization differently as we move ahead. Second, digitally enabled logistics networks are at our core, and we continue to enhance our technology capability. Third, on ESG, we continue to strengthen our practices. We are seeing good progress about our goal. As the group evolves into a global logistics enterprise, we have restructured resources to align with the expanded business portfolios and geographies. This ensures that our strategic business pillars, namely Australia, international and Singapore are right sized and equipped with the resources they need to succeed. You will see us reorganizing into these 3 strategic pillars, and we will start to provide more color in this view. We have strengthened our management bench to ensure that we have the right talent to drive growth and create value. This has involved both bringing in external talent and developing our existing employees to take on more significant roles through the organization. We have divested several non-core assets as we reviewed our portfolio for strategic fit and returns and reinvested into growth initiatives. Across our markets, we've been building, transforming and scaling our networks. We further strengthened our position in the Australian logistics market. We raised our shareholding in FMH from 51% to a super majority of 88% a year. FMH has performed well since our initial investment. We continue to expand its business plan. Besides growing the 4PL business, we have been building its 3PL network as well, bolting on another acquisition during the year. At CouriersPlease, our last-mile delivery business, we implemented initiatives that have significantly improved operational efficiency. This included reviews and changes in line-haul management, [indiscernible] efficiencies and manpower planning. Our Australian businesses have collaborated well for cost savings and business potential. For instance, the utilization of FMH's tech platform by CouriersPlease. This drive for revenue and cost synergies will continue with greater pace this year. In the international business, a substantial amount of work has gone into reengineering the networks. This is a markedly different business from what it was pre-COVID and I'll elaborate later. In Singapore, we continue to focus on our infrastructure strategy and enhance our network, increasing operational and carbon efficiency. Utilization of our [ regular ] box services has increased, and we saw 38% growth in monthly volumes over the year. New initiatives have been rolled out such as our electric fleet and e-commerce service counters at post offices. We continue to provide best-in-class service quality in our delivery, and we are glad to have been awarded Last Mile Partner of the Year at the Supply Chain Asia Awards. On the business front, we saw good traction in Australia and encouraging signs in the international business. In Australia, the 4PL business grew strongly through COVID disruption. The advantage of the logistics ecosystem that we offered, enterprise customers not only ensure certainty of fulfillment during those uncertain times, but also greater control over visibility of and service quality. Post-COVID, leakage has been minimum. We continue to acquire new enterprise customers onto our B2B network, with annualized new business revenues last year amounting to over AUD 75 million. In the cross-border business, the supply chain disruptions over the last 3 years have significantly affected our conveyance costs and volumes. We are seeing signs of improvement, though. Conveyance costs have declined 34% year-on-year as at March and volumes appear to be bottoming out. The declines in volumes have leveled off from over 30% year-on-year in Q1 to about 8% in Q4. In Singapore, our e-commerce volumes declined 36% a year, largely due to the loss of volumes from a major e-commerce customer that [ 16 ] logistics we saw that previously. Nevertheless, we pushed ahead to grow our e-commerce logistics business. Despite the normalizing of e-commerce activities post-COVID, volumes from our top 5 e-commerce customers were up 19%. The Post and Parcel segment, as mentioned, recorded its full year loss the first time. Let me provide more specific detail on the international and postal businesses. The supply chain disruption through COVID was significant, as we said previously, with the elevated conveyance costs and extremely limited air capacity, reducing the volumes that we could deliver. Revenue from International Post and Parcel IPP has fallen to just 60% -- under 60% of the high we saw in FY '19. We had to relook our cross-border strategy and make substantial changes. Our network and business is now more commercial. We have diversified our service offerings, but that we are using increasing commercial arrangements in addition to both the deliveries. For instance, we created additional routing options for our trade lanes on the back of new partnerships in markets such as the U.S. and Australia and also leveraging Quantium Solutions network. We have shifted from a single trans-shipment hub in Singapore before the pandemic to a multimodal network. We now have additional transit hubs and new operations in key markets for greater resilience and alternatives. Operationally, we are significantly more agile in line-haul cost management with new initiatives such as chartering our flights during the year to manage our conveyance costs. As a result of these new and stronger capabilities, we now have cross-border commercial solutions that are not only more cost effective and faster for customers, but also higher margin for us. This shift from postal to mall commercial offerings is seeing early signs of success, and the business is joining, although it will still take some time to recover to pre-pandemic levels. We will invest in technology to enable this business, much like the 4PL operation in our Australian market. Let me now speak about the domestic postal operation. This year, we celebrate our 165th anniversary of the postal service. Through the years, this public utility has constantly adapted and transformed with the time. Today, we continue to provide this essential service at the highest service quality, exceeding regulatory requirements. We also got the highest in reliability in the UPU rankings with this performance. Through COVID, the postal service serve the nation with deliveries of essentials, such as ART kits and masks to all households. We have invested in our people through innovation, automation and productivity improvements that have made us one of the most efficient postal operators with one of the lowest postage rates worldwide. Our situation is not unlike all postal operators around the world as we all face the structural decline in letters. For the last few years, while letters continue their relentless decline, we actively grew e-commerce/logistics deliveries to offset the drop in letter mail and increasing operating costs. Through COVID is helped to cushion the postal business. Costs have now increased significantly, especially in the inflationary environment. Letter mail volumes are now just 60% of levels pre-COVID and we reduced e-commerce volumes have resulted in a sharp loss in operating leverage. Post and Parcel recorded its first-ever operating loss for the year and we are reviewing the commercial sustainability of the domestic postal business. Moving to our other strategic initiatives for growth. The future of our logistics is technology driven. We are enhancing our technology capabilities for the organization to be more operational and cost efficient and to better serve customers. Australia, we have in FMH, a cutting-edge digitally enabled platform that has underpinned the strong growth of the 4PL business over the last few years. We are rolling out upgraded capabilities such as greater analytics insights and more tools for operational excellence. Similarly, we see the future for the international cross-border business powered by our digital platform, much like what we see in Australia. In Singapore, our focus is on a smart urban logistics ecosystem that is carbon-friendly and operationally efficient. We intend to serve customer needs by transforming the traditional post offices. There have been significant achievements in our sustainability pillars, which you can see on the next slide. We made significant progress towards our environmental goals with 30% carbon emission savings for Singapore operations from baseline levels towards our Net Zero target that has been laid out. We are advancing on our TCFD journey and have incorporated ESG performance to remuneration and incentives for senior management and into the organizational balance. We continue to enhance the culture of trust. SingPost was ranked 7th out of 489 companies, in the 2022 Singapore Governance and Transparency Index. In the aspect of our collaborative partnerships, collaboration with customers to promote carbon efficient delivery options is a good testament to our effort. Our staff continued to be well recognized with about 100 receiving the National Excellent Service Awards last year. Now moving on to what lies ahead. First, the economic outlook remains weak and operating costs have risen across all our markets. The e-commerce market growth has reverted to pre-pandemic trajectories post-pandemic. There are opportunities for our cross-border e-commerce with China's reopening and recovering export market. The normalization of supply chain and greater air capacities continue to lower air and sea freight rates. We expect the IPP business to continue improving, but the freight forwarding business slightly to decline. We expect the Post and Parcel segment to continue to be loss-making this new year. Finally, the Board has initiated a strategic review of the group. Through the transformation of the business, we have reviewed our business models and capabilities and the diversity of markets we operate in and repositioned ourselves for growth. The transformation to date has now yielded us opportunities to pursue further. SingPost is transforming into a global logistics enterprise and is well positioned in high-growth markets with the scope for further transformational investment. The Board has initiated a strategic review of the group's portfolio of businesses with a view to enhancing shareholder returns during that the group is appropriately valued. We will make further announcements on the group's strategic review as appropriate. With this, I'll hand over to CFO, Vincent Yik, to bring you through our results. Vincent?

Thank you, Vincent. Good morning, everyone. Good to see you again. I'll start with the key highlights for the financial year, followed by results for the second half. So last year was a significant year for SingPost. So the group transformation has yielded results. So revenue grew probably 12.4% to a record SGD 1.87 billion for the full year. So the important highlight is that this was underpinned by growth in new business areas in Australia and logistics. So logistics revenue increased 32.4% to SGD 1.3 billion. While our logistics operating profit increased 91% to $84.7 million and that includes the consolidation of FMH for the full year for the first time. So I said earlier, Post and Parcel registered a loss of SGD 15.9 million for the year, and I'll talk a little bit more about this later on. So moving on to the second half highlights. For the second half growth in Australia helped partially offset the decline in freight forwarding and Post and Parcel revenue. So the second half net profit improved to SGD 34.6 million compared to a net loss of SGD 9.9 million in the first half. The logistics operating profit continued to grow, increasing 54% to $43.2 million. And Post and Parcel incurred a net loss of SGD 3.8 million for the second half, whilst due in the net loss, this has improved significantly over our first half results. Moving on to revenue and profit mix. The revenue and profit mix has changed significantly, which validates the transformation and diversification that the group has undertaken over the past couple of years. So the majority of our revenue and profit now generated internationally. So Australia makes up 45% of group revenue and just over half of our operating profit. So this has increased from 26% of revenue and 9% of profit last year. In the segments, we see logistics revenue outsizing Post and Parcel. We are transforming into a global logistic enterprise, so our growth in logistics has helped offset the decline in Post and Parcel. The Property segment showed a lower revenue and profit, largely due to the sale of a self-storage business last year. Looking into the segments, in Logistics, the group revenue was attributed with the Australia business. The revenue from FMH and CouriersPlease nearly doubled from SGD 430 million to SGD 850 million for the full year. For the second -- the H2 second half revenue from Australia business was up roughly 41%. The FMH B2B business continued to perform strongly, driven by increased volume from customers as well as new -- acquisition of new customers. There were also strong inorganic contribution from strategic acquisitions. This helped to offset lower revenue from CouriersPlease due to the drop in e-commerce delivery volume post-COVID. But despite its lower revenue, CouriersPlease has improved its margin from operational restructuring measures. Famous Holdings has recorded exceptional revenue through the pandemic. Since then, the sea freight rates as well as volume has started to normalize and revenue has moderated down this year but still contributing strongly to the group. Overall, operating profits are strong, growing 91.3% for the year and 52% for the second half, largely contributed by both FMH and Famous Holdings. Now moving into Post and Parcel segment, the revenue from Post and Parcel were lower due to the decline in both the DPP and IPP businesses. So overall, the segment made an operating loss of SGD 12.1 million in the first half and SGD 3.8 million in the second half. So if you look at the chart on postal performance, you can see the direction of the various businesses in this segment. So first, in the DPP segment, which comprises the 2 lines there, you can see the dark blue line and the red line. So this is our delivery and our post office network. So DPP has benefited from the COVID-induced e-commerce spike in the previous couple of years. However, the loss in e-commerce volumes from a major customer and the continued mail decline over the past few quarters have affected our operating leverage. So costs such as labor, utility, fuel have also increased as inflation has increased. So this has impacted the cost of operating the post office network as well. So in IPP, which is represented by the dotted lines, the business was affected by pandemic-related lockdowns in China, particularly in Q1, as you can see. So which reduced its cross-border e-commerce logistic volumes, particularly you can see the drop there in the first quarter. However, we have been actively managing margins while shifting away from high-cost trade lanes, which resulted in lower revenue. So over the past year, it's really about managing margins. So the decline in air conveyance costs, IPP is starting to show some improvements. So move on to the financial position. The group ended FY 2023 with strong operating cash flow and with cash holdings of close to SGD 500 million. So we have moved to divest certain non-core assets over the last 2 years have recycled some of this capital. And as we invest in our strategic initiatives, we continue to remain very prudent in our capital management. So over 99% of the group's borrowing are in the medium to long-term, give have about 93% in fixed rates to mitigate any further interest rate hike in the near term. And finally, on to the proposed dividend. So the Board has recommended a final dividend of SGD 0.004 per share. Put together the interim dividend of SGD 0.0018. The total dividend for the year will be SGD 0.0058 at this amount to a payout of 40% of underlying net profit for the year. So that proposed dividend will be put up to the shareholders' approval for the AGM [indiscernible]. That marks the end of my presentation. Back to you.

[Operator Instructions]

My first question is on the postal side. I think 2 interesting commentaries that you made in the presentation. Number one is that you are expecting continued loss for Post and Parcel segment in the upcoming financial year. So can we confirm if this is mainly for the domestic Post and Parcel business? Or are you referring to domestic plus international combined? And can you elaborate a bit more on your thoughts around this? Second question is, I guess, also regarding this segment, you mentioned you are reviewing commercial sustainability for domestic post and parcel. Can you share a bit more on your latest thoughts around this?

On the first one, we do expect continued loss for the -- principally the domestic postal part of the business. And that's related to the high-cost environment, the inflationary costs over the last few quarters have been [indiscernible] quite significantly. The cost of running the postal network in Singapore as well is also a very high cost item for us. And that coupled with the near-term e-commerce pullback as we talked about. We do expect that to continue to grow, not to say that it won't grow. It's just that the rate of that growth relative to the rate of the continued decline in letters versus the costs that we see will present a very big challenge for domestic postal service. In the IPP segment, I believe we've covered that in the presentation, somewhat, we feel that the signs are improving. We are cautiously optimistic of how this will go over the last 2 quarters, it has -- the margins have significantly improved, still a long way from what we used to see in IPP. And as we continue to architect this business, it will be increasingly commercial rather than postal in terms of the kind of services and products that we bring to the market. So that settles the first question, hopefully. On the second question on commercial sustainability, we have been working all these years to manage the costs and to make sure that the operating leverage that we have with the postal network is adequately oriented towards making e-commerce [indiscernible]. You saw the stats that we provided earlier. Through COVID perhaps is a view of the future, if you see that way, when there is that replacement of revenue, the e-commerce revenue replacing the decline in letters, you could see that narrow and it cushion the business for a while. The letters business is really going through this massive structural decline that has been happening over the last few years. It's not like any other postal organization in the world. So we are facing the same issues. There is no real underlying revenue supporting the letters part of the business. So naturally, it has to come from commerce deliveries. So we have to review the sustainability of this business in the sense of what are the levers we have to ensure that we can continue to run this as efficiently as possible. We're also recognizing the postal obligations that we have to the country, and we take that very seriously. However, we do feel that by all these commercial levers that we have on our site, which we will certainly do the dual divisions to review. There may be a need for us to also consider other structural changes in time. So those are things that is going to form part of the strategic review that we talked about. And once we get through with a bit more detail, we'll be happy to share with everybody. [ Casey ] hopefully, that answers the question.

Maybe just a follow-up on the IPP business. I noticed based on your chart on Slide 23, the IPP performance for 2023 remains lower compared to the previous financial year despite, I guess, China reopening and you're mentioning that the conveyance costs has come off compared to last year. Can you help us better understand this relatively lower performance for IPP despite all these trends. What more can we do to see better recovery in the coming year?

Yes. The international conveyance costs for e-commerce, global deliveries, cross-border delivery has been profoundly impacted as a result of the COVID situation. So if I take us back time prior to the pandemic, we were managing this business through a postal transhipment model, right? So generally, the volumes that originate from the market is typically China will flow through Singapore is a trans-shipment hub and then we manage this business certainly that has been massively disrupted with the airfreight disruption. Changi Airport being closed, we didn't have those opportunities as much as we did through the -- before the pandemic. So this business has been restructured. So the margin structures have to change. The business itself has fundamentally been altered with various I guess, the landscape adapting to this new reality. So there's a lot more direct shipment options from source market out to the destination market. Our -- as we said earlier, our focus now is to develop a multimodal network. So part of the development is in the investment of making sure that we have all these alternative options. Part of the investment is to ensure that we understand what is this new margin structure going forward. We also, as Vincent mentioned, we have been managing margins as a priority more so than revenues. So a combination of revenues, volumes and margins will ultimately yield the performance. So I think this is a game about scale. Firstly, we have to get this -- we have to get the supply chain back again on its feet, serving our customers with some resilience. We have the multimodal network, we need to have the options beyond alternatives beyond us, the all way of doing business that are choosing upon. So that will all take time to cover -- that will give you a bit of color behind how we intend to revitalize [indiscernible]. And I think we never broke up the detail in terms of specific margins and specific operations for a good reason, right? But this chart itself is meant to give you an indication of how we see the business in terms of the trend, how once all those strategies, how those activities have come together, either line should improve and there is some growing confidence that is improving.

Just 3 parts to my question. The first on IPP. So if you assume the air flights all returned back to pre-pandemic, would it -- does it matter because when you mentioned something fundamentally has changed. So I just wondered, is it because flights have not returned or even if they do return, there's something has fundamentally changed? That's my first question. The second question is just on FMH. Could you give us some color on what was the organic growth in second half '23? I mean, we can do something on the envelope competition, but if you have an exact number that would be helpful just to understand the growth trajectory? And also on FMH, what are some of the usual operating set that is enhancing the platform in general? And my last question, sorry, on the restructuring for the domestic letters, what are some of the models that you've seen that looks interesting in e-commerce or you're moving to new structures that may be probably not seen anywhere else, I guess?

So I'll take a stab at -- I just want to clarify your question on FMH. The second part with the enhanced perform.

Sorry, because FMH is meant to be a platform. So in any platform, the 2-sided market, whether you're getting more suppliers on [indiscernible], just some color on the operating that enhances the so-called platform of FMH.

How that whole business model is ramping.

Not so much, but any platform is all -- so just what is growing, what are -- maybe there are more truckers on the platform, more buyers on the buyer side or on the seller side.

Okay. So I'm going to get my colleagues to all chime in, but let me just -- so IPP also if I believe you can -- a bit of additional clarity on what fundamental change. Simon, maybe you want to prepare to take the questions on the organic growth as well as how you see that platform being enhanced driving business. And Su Yin maybe you deal about the models, everything. So fundamentally, what IPP has changed is that, a lot of that revenue is now serve -- what we used to do. That revenue is now served through alternative means, so we were [indiscernible] to go direct. We used to offer a universal service globally with our postal options. It is now a challenge. As I imagine, people flying out directly out from China to the rest of the world right bypassing Singapore. So part of it is getting the flights and the capacity is back in Singapore to generate that volume. That's it. You need to get it back, right? Because people have found alternatives to do this. So that's what we offer to do now is we have a range of options, we're going to continue, there will be other ways that we can do so commercially and so that's one of the options that we have. Li Yu, you have anything you want to add to this?

Yes. I was going to say that to add on to Vince's point, throughout the pandemic period, you see the disruption of supply chain cost, the cross-border volume to structurally decline due to the fact that there's no capacity or air capacity at all. So that's why it takes the certain level amount of time for the supply chain resilience to come back. Also, the traditional way of leveraging the postal solution through one model of transportation to deliver the product across the border has changed and accelerated by the pandemic towards multimodal means that there's a structural decline on the cross-border volumes. So that takes time for it to come back. So therefore, we are cautiously optimistic, at the same time, with more flight and to your point, with more flight than the capacity coming back, it will help us to bring those volume back with lower volumes across the border.

Yes, hopefully that will be apparent. So Michael?

The IPP solution is a poster, but as mentioned, they are good commercial option. So the number may not flow into the IPP, but we will still get the revenue, just to get that clarification right.

If you can hit back scale, if flights resume, then maybe your routes or routes will be more competitive than you do that direct, is that one fair way to just kind of assess the whole situation? You probably can say that, I think the important point is, there is still a growing from a cross-border space. That continues to grow through the year, we -- growth rate well supported it. So it's not for lack of volume and opportunities, it's the fact that over the last 2 years through the pandemic, we didn't really have the means to do it properly. And part of it is structural, part of it is the circumstance of Singapore being in -- being lockdown to an extent. So we are taking steps to address those most. Yes, so maybe in the next 1 or 2 quarters, I feel maybe we have a bit more color to share how this journey in. Okay. Simon, are you there, would you like to maybe have a comment on how you see FMH organic growth and what you see makes the platform successful?

Yes, certainly. So I think I don't have the exact numbers in front of me, but -- so from a -- we definitely had a stronger first half in terms of -- in growth terms year-on-year as you would expect, given that the previous year we were obviously in those lockdowns in Victoria and New South Wales. So I think it's the organic growth in the second half the [ SME ] slowed when you compare year-on-year to circa 15-odd percent versus when we look at the overall full financial your organic growth sitting around 28%, 29%. So definitely the first half, there was a significant momentum and we were having record week upon record week in terms of growth rates which we carried a lot of momentum for us for the full financial year. So I don't think -- I just think that there was a significant amount of pent-up demand or I don't think I know there was a significant amount of pent-up demand that once the markets opened up, there was a lot of activity, specifically in retail, which really commenced around that Easter period last year and then kind of carried on right through to Christmas. But as you'd expect, with interest rate rises the first kind of 3 months of this calendar year, things have called in the market and quite freely available in the press in terms of what's happening in the market as is common across the rest of the globe. But we definitely have also benefited off the back of a cooling economy has meant that a lot of shippers or freights have looked for additional or more cost-effective transport solutions. So we're seeing a significant amount of new business coming on, so that's the great kind of cycle of our business that when times are good, you kind of ride the wave of increased volumes from your existing customers and when the economy cools, you pick up a lot of new business. That's kind of how we're seeing it. So whilst the growth rates have cooled, they're still significant, obviously, growth in the underlying customer base. Your second question around the platform, I think what you are -- in terms of the model that you're referencing, obviously, I understand that model quite well because that's typical of what happens in the U.S. where essentially that got like business development individuals actually looking for new suppliers to bring on to their platforms. From our perspective, typically what we will do is we will -- it's not as, I guess, transient as that. We will identify carriers that are required to meet the customers' logistics solution and then we will onboard them, but it's quite a rigorous and onerous onboarding process. So whilst we deal with circa 200 odd different carriers, only about 150 of them would be common and regular. And we don't look to grow those unless we absolutely need to because of the safety aspects that go with managing a carrier panel. We don't necessarily want to be bringing on additional carriers unless we absolutely have to. So certainly, from a platform perspective, the activity, the significant activities on the customer side where you're bringing on customers across each different segments as often as you possibly can because that obviously drives growth. So that's -- it's slightly different. I think our broader future plan will be to obviously open up the network to include more transient carriers like your sub-contractors and your owner drivers and the like. But at this point in time, we don't have the requirement to do that because, I guess, our existing carrier panel can meet all about existing requirements. Does that answer your question because I think you're referencing is the U.S. model, we're effectively bringing online providers because the [indiscernible] model there typically is to address customers less than truckload and truckload requirements as opposed to parcel and priority requirement. So as we are -- it's very different in Australia where we provide an exclusive multimodal solution where we're doing kind of every different service that a customer could require. But there's a lot of volume in that. So it's not -- I guess it's not optimal to be bringing on carriers well in early because there's so much admin that goes with it and so many safety aspects that need to be managed. Does that make sense or?

Yes, I think what Simon has -- in my discussion with Simon as well, we're pleasantly surprised with the strength of our business even after coming up from COVID. I think we do recognize that, that there was a period of time through COVID that because of the disruption, how we could get into the act and support our customers with a resilience what we just have on the other side so many different options for our customers. That was a huge plus point for customers to onboard with us. And on the other side of the pandemic now coming out, they continue to see us as a partner that helps them, I guess, manage their cost because we do have all these option still. So I think on both sides, on the resilience front and as well as the cost front, we are adding value to our customers way and the rest of it, as Simon mentioned, is just managing the utilization, making sure that the partners that we have as well effectively utilize and everywhere we gain some growth. I guess that's the power of 4PL and in a way, if I can just allude to it, that's how we see our brand of logistics growing as well. So in the international space, they opt to be the way. So rather than using a postal solution throughout what we used to do pre-pandemic, it is going to be a lot more about integration with partners, different opportunities, getting the product across and then having alternatives who have those people any one time. And maybe I'll ask Su Yin to have a comment on what you see about the models going forward for postal in basically?

Yes. So I think it's -- there are 3 parts to this. Primarily the first part will be what we do within the business itself right now. So there's obviously still opportunities for us to continue to grow the eCommerce piece. I think the market in Singapore and the landscape given that the cost is continuing to rise, it will affect all other players in the market. So I think it is where we have an opportunity given our strong infrastructure and infrastructure strategy, there are still opportunities for cost optimization, cost management, which will give us lot more efficiencies and higher productivity. And hopefully, it will be more profitable compared to some of our competitors. So from a eCommerce perspective, I think we are still very optimistic about how that could continue to grow in terms of our share of wallet and even the market share within Singapore. On the postal business side, I think there are definitely opportunities in the regulated business to look at some of the structural changes that can be taken in terms of cost. So this is something that we are going to reference, also my second point will be, reference some of the other postal organizations in the world. Obviously, we're not the only ones that are in this situation right now, Royal Mail Australia, we have all spoken up quite fervently about the decline in postal, Malaysia post as well. So I think these are good opportunities for us. One, interactions with the other postal organization to understand what are their challenges and how they are also looking at restructuring their businesses. I think we also have some view on that, but I think that we'll have to involve, I think, relevant discussions with stakeholders to see how that can be supported moving forward in terms of the overall structural change. So at this point in time I think, it's still fairly early for us to probably land on a fixed model, but I think there are definitely avenues for us to discuss with development stakeholders on what are some of these models moving forward. Well, I would say that if you look at some more developed countries, I think there are very few that are in our situation where they are listed and they are, yes. So I think -- but we do understand that in -- there are multiple models, so one is we could be looking at potentially what it will cost to deliver an item. So now we pay fairly cheap postage rate, as Vincent highlighted, that could also be an opportunity, but that will have to be discussed with development stakeholders.

So I understand that the convenience calls actually declined year-on-year, but how do they compare to pre-COVID levels, do we ever expect it to return to the pre-COVID level or it's likely to be higher?

I have Phang Heng to answer your question and take us through quite extensive, right? So as anybody guess when it will come, I think capacities are still not quite where they should be, I think from my read probably about at best 70% to 80% of our capacity is being restored. So there's still some ways to go before we get back to the pre-pandemic kind of capacities. A lot of our work that we do rely on a combination of both [ betty ] space and cargo flights. Cargo flights have pulled back since coming out of pandemic, betty space has increased but not quite back to where it used to be. So there's still going to be a little bit of time before we get to all that the capacity being restored. So I think it's still elevated compared to what we used to see -- I leave you know what the number is. How do you see right now compared to what pre-pandemic numbers or what numbers you would expect going forward?

To your point, I think we're around at around 70% in terms of where we are in terms of air capacity. So therefore, still a long way to go, but cautiously optimistic that we can see some breathing air towards the Q3 of this year will be good ideally. But you can see the overall free forwarding the supply chain market is largely not recovered yet from the supply chain side. So they are also looking to the trend of this. But to answer your question, I think getting the air capacity back to normal will be one of the key areas that we can benefit from.

I think last time, the number was like almost double the pre-COVID level, so now should be lower than that, right? 1.5?

Probably around there, this is not back to previous, but, yes, it is not double, but it's come up. That's been helpful and shows the trajectory, I suppose, but it's too elevated, probably very [ 1.45 ] times.

Then also, can you also comment on the eCommerce trend, what opportunities that you see or what trend are you seeing there?

Do you mean locally or globally?

Maybe both locally and internationally.

So I will maybe to add a little bit more color I invite my colleagues also chime in. So maybe Su Yin Neo can comment a bit about the domestic piece, Li and I mean Richard, if you want to have a stab at how you see things developing in Australia, which is a very big market for us. So generally, everybody saw a huge bump through COVID also close online options became the level the day people are buying things of their mobile phones and eCommerce platforms. That has certainly come off. So it has -- the huge bump has gone away. We thought opening that currently has been the way it has turned out. The other issue is consumer sentiment, all around the world is a bit challenged. So I think discretionary spending is though lower to -- everybody is a bit more cautious, we probably spend that money. That said, there is this long-term trend line that if you go back to pre-pandemic that is that line, the COVID bump was this normally that came about over the last 2, 3 years. But the long-term trend line continues to estimate that globally it should be 15%, 20% type of ages that we see for the next few years. So that's a general viewpoint from me. Probably I will just ask Su Yin Neo comment on how you see it in Singapore.