Some express delivery operators in Thailand are charting new growth paths to avoid reliance on e-commerce platforms.

To escape the saturated "red ocean" of price wars in the delivery market, the service providers are pivoting towards premium, value-added services, ranging from fresh fruit to pet and medical logistics.

These operators are also investing in artificial intelligence (AI) and automated systems to cut costs and enhance operational efficiency.

Regulators are drafting new rules to supervise the postal service and the e-commerce sector, aiming to ensure consumers gain a greater benefit.

The estimated value of the express delivery market in Thailand is 117 billion baht, based on the revenue of six major players in 2024.

Fresh fruit war

KEX Express (Thailand) was acquired by S.F. Holding, a leading logistics provider in China, enabling KEX to integrate advanced technologies and expand its operations, with a strategic focus on cross-border e-commerce between China and Southeast Asia, said chief operating officer Stephen Bao.

In November 2024, KEX discontinued all its agreements with Lazada and Shopee for product delivery.

E-marketplace operators have reduced the fees paid to logistics delivery firms to just 12-14 baht per parcel, down from 18-19 baht, in a bid to increase their profits.

Mr Bao said SF plays a vital role in supporting Thai agricultural exports by streamlining logistics from farms to consumers, particularly for the Chinese market, improving profits for local farmers.

"Looking ahead, SF aims to enhance its services by leveraging big data and AI to optimise delivery networks and improve customer experience," he said.

In January, KEX announced a revised pricing structure for its parcel delivery services to better align with market dynamics. Under the new model, service fees are calculated based on the actual weight and dimensions of each parcel.

In response to escalating demand for seamless fresh produce and plant delivery, Mr Bao said KEX customers can now send fresh fruit or plants in plastic baskets with secure lids.

With a weight capacity of up to 30 kilogrammes, this service caters to the needs of orchard owners, fruit shop proprietors, and customers, according to KEX. Customers can ship 3kg of fruit for a starting price of 40 baht.

Flash Express offers fruit delivery services with free farm pick-up and no minimum quantity required.

Customers can schedule pick-ups via the Flash Express application or a drop-off at Flash shops or its partners. Delivery fees start at 50 baht for the first 2kg.

Flash Express rebounded in 2024 by posting a profit of 940 million baht, following losses for two consecutive years.

The company attributed the strong performance to developing technology systems and essential infrastructure to meet customer needs.

AI and automation

SPX Express (Thailand) said it continues to strengthen its delivery capabilities through the use of automation and AI in areas such as demand forecasting, route planning, and parcel sorting.

These enhancements support greater consistency in service levels and enable more responsive operations during periods of high volume, noted SPX Express.

"We remain focused on providing fast, reliable delivery services that elevate the customer experience across Thailand, ensuring convenience, speed and dependability in every delivery," said the company.

Kiattichai Pitpreecha, chief executive of DHL eCommerce for Southeast Asia, said technology is one of the largest investments for the company in recent years.

"Our technology spending not only focuses on modernisation, but also builds features and capabilities that improve customers' experience, enhances efficiency, and sharpens our competitive edge," he said.

DHL's customer portal provides a comprehensive shipment dashboard including their shipment record, performance and key trends.

Apart from applying AI to various back-end processes, the technology is also being used to improve its operational efficiency and quicken complex last- mile and customer doorstep processes, while reducing human error, said Mr Kiattichai.

Meanwhile, state logistics enterprise Thailand Post is investing 1 billion baht this year to install automatic systems at its 19 distribution centres nationwide.

New market

Thailand Post adjusted its business strategy to focus on offering specialised logistics services, addressing risks stemming from uncertain parcel volumes from e-commerce platforms that are switching to cheaper delivery operators.

E-commerce business growth is also slowing, said Thailand Post president Dhanant Subhadrabandhu.

To lessen its reliance on e-commerce platforms, the state enterprise wants to nurture a new customer base with low volatility, offering specialised logistics services.

One new service is the delivery of medical supplies for both humans and pets.

Although the number of parcels from this new segment is paltry compared with the volume from e-commerce platforms, it has a strong growth rate and low risk because customers come from many sources, not a few platforms, said Mr Dhanant.

Thailand Post recently established a new business unit called Healthcare Logistics to offer the specialised service.

In addition, the company partnered with Chulalongkorn University's Faculty of Veterinary Science and the Bangkok Animal Hospital to launch a pet healthcare logistics service through its EMS delivery, capitalising on the growing pet market ecosystem.

The partnership dispatches veterinary medicines and medical supplies to pet owners via two service channels: home delivery for in-person visitors at Bangkok Animal Hospital, and home delivery for those using an online televet service.

Data-driven operations

Sutthikead Chantarachairoj, president of the Logistech Association Thailand and chief executive of shipping aggregator Shippop, said parcel delivery providers are expected to ease off of aggressive price wars as the number of players in the market declines and some operators improve their business performance.

At the height of the competition, KEX, Flash, and J&T were offering delivery rates as low as 7-9 baht, he said.

Mr Sutthikead said these companies are shifting their focus towards data-driven operations to optimise expenses and profitability.

For example, Flash introduced key performance indicators to encourage employees to enhance their capabilities and adopt technology that reduces time-related costs.

He said this reflects a performance-driven work culture where staff are expected to manage pressure to help the business remain competitive.

"Unlike offline channels, we haven't seen a significant drop in parcel volumes on the online channel, despite the subdued economy," said Mr Sutthikead.

"E-commerce has become the norm -- some sellers continue to perform well, depending on product quality, brand strength, and customer retention strategies."

Thailand's e-commerce market is projected to reach 1.07 trillion baht this year, up 7% year-on-year, according to Priceza.

Regulatory change

A regulatory shift is expected to reshape the logistics playing field. The Digital Economy and Society (DES) Ministry directed Thailand Post to revise the arcane Postal Act of 1934, aiming to improve postal and logistics service regulations as well as service quality.

The draft of the amendment extends oversight to all postal service providers, not just Thailand Post, aiming to ensure fair competition and consistent service standards across the board.

The amendments are intended to ensure healthy competition and proper supervision, DES permanent secretary Wisit Wisitsora-at said earlier.

"The draft addresses service providers of all sizes, without creating a cost burden for small operators," he said.

Meanwhile, the Trade Competition Commission of Thailand is drafting new guidelines under the 2017 Trade Competition Act.

The guidelines address unfair trade practices, monopolistic behaviour, anti-competitive conduct, and restrictions on competition by multi-sided e-commerce platforms.

The new guidelines, which are expected to take effect in September 2025, require digital platforms to provide consumers with multiple delivery options.

Visanu Vongsinsirikul, the commission's secretary-general, said a major complaint voiced earlier by online merchants was e-commerce platforms required merchants to use their own delivery services.