Has Pos Malaysia cracked the code in its digital transformation?

• Focus on business sustainability does not hamper ESG ambitions
• Sustainability means using a strategy that shifts CAPEX to OPEX with right partners

For a long time, the immediate picture that came to mind when one thought of Pos Malaysia Bhd was that of our regular postman and his trusty kapchai. But of late, there has been another ‘mascot’ in the form of a bubbly English gentleman named Charles Brewer.

Charles took the helm at Pos Malaysia in July 2021. Practically every CEO during this period was forced to grapple with transforming their organisations, driven in large part due to the significant shifts in business and consumer demands brought on by the pandemic.

But Pos Malaysia had a further handicap. Charles was the group’s fourth CEO in five years. The group had already experienced a full year of losses in FY2019. The last time this had happened was in FY2008. It recorded a net loss of RM308.02 million in FY2020. Yet, with the most extensive last-mile reach – it delivers to more than 10 million addresses across the nation – the importance of its role as the national postal service required that it continued to meet the changing needs of the nation.

Also, being a public listed company, new ESG compliance requirements meant greater investments needed to be made to address its carbon emissions, in line with its stated ambitions of achieving net zero by 2050, and a 50% reduction in scope 1 and 2 emissions by 2030. Towards this end it has targeted to electrify its entire delivery fleet by 2030, with 305 eBikes and 156 eVans by end 2023 while aiming for 1,300 eBikes by 2024.

As Charles puts it, addressing sustainability and transforming a business with fiscal challenges doesn’t have to be mutually exclusive.

Charles is in familiar territory when talking about transformation. He has, over the course of his career, held the roles of CEO, sub-Saharan Africa at DHL Express; CEO of DHL eCommerce, a role he assumed in 2016 to ‘write the next exciting chapter for Deutsche Post DHL’ just as the sector was about to explode; and COO of Canada Post. If anyone needed any further evidence of his knack for transformation, one just needs to step into the new Pos Shop convenience stores the group recently launched, with a view to ‘offer further retail convenience at the post office’.

DigitalNewsAsia caught up with him to talk more about Pos Malaysia’s approach to business and environmental sustainability.

SM: Being in the postal and logistics business, you can’t help but manage lots of assets, and many of these assets are likely ageing and carbon intensive. But at the same time you do not have as much fiscal flexibility to invest in transforming such assets. How does a company like Pos Malaysia manage this ROI conundrum?

CB: For us to execute a plan that involves high capex makes life incredibly challenging, so we look for creative ways to execute the plan and for us sustainability is working with really good partners who translate that CAPEX to OPEX. So, to give you an example, one of our main providers of our two wheeled electric vehicles is Modenas who are a great partner and rather than us having to buy the vehicles we lease them instead. And that lease cost is lower than what it would have been if we bought traditional vehicles. And it keeps the cost as an OPEX which is significantly better for us. Similarly, you know, we partner with our solar panel providers. They take the cash burden of buying and installing those solar panels. But we share the energy savings with them.

We don't do anything that doesn't tick both our sustainability roadmap and our fiscal roadmap. And so, in all cases, whether it be electrification of fleet, whether it be telematics, whether it be solar panels, in every single case, we found scenarios and partners that will, for the most part, make it an OPEX and for the second part are willing to share the journey so that we limit the cost exposure to Pos Malaysia.

SM: But you also need to get almost 18,000 employees on board with the program. How do you incentivise and motivate them?

CB: You must deliver on your purpose, otherwise employees will have a choice and they'll go elsewhere. It's very true in the western world, in North America and Europe, where people are choosing to work for companies that are doing good. So, it's very important for your people.

I was in Malacca a couple of weeks ago where we put in 4 new electric vans. I think we have about 40 normal vans there. One of the couriers came over to me, and he said “Hey, Charles, how are you?”. We were talking football for five or ten minutes. And then he said, “Hey, can I ask you a question?” And I said, yeah, sure. And he asked me when can he get his electric van. And I said, well, we just got four here. He said, well, other people have that but not me. I now hear that more often. It’s the first or second question at most of the town halls I go to - "When do I get the electric vehicle?”. Customers love it and our courier’s families love it. But the benefits go much deeper. The telematics also make it safer for our couriers. Cleaner, greener, but also safer. If the tyre pressure is low, or the vehicles are being driven too fast – we can capture all of that.

SM: How do all these initiatives translate for your customers? There has to be an upshot to this beyond just Pos Malaysia.

CB: For companies and customers who are working with Pos Malaysia, when they're reporting to Bursa Malaysia on their emissions, they can report positively under scope three, that their supplier for transportation, supply chain, mail and parcel fulfilment, has the data. If they're using anybody else in Malaysia they can't. Malaysia is still on that sort of early-stage adoption of sustainability, but that will change as we will be in a position to positively impact all our customers.

SM: What would a cheat sheet for an organisation yet to start on its transformation look like?

CB: I think first and foremost, you just got to get on with it. There's far too much talk in the world. Far too little action, in my humble opinion. I would keep it simple and focused. Don't shoot for the moon. One of the things that allows you to get through a change curve or transformation at a rapid rate is success. Success breeds success. If you set your aspiration too broad or too unrealistic, and you don't achieve it, people start to lose faith. They start to lack the trust. The board, employees, stakeholders, all that trust breaks down. And trust is a function of doing what you say.  So, I would suggest start small, keep it focused, show success, celebrate that success, and from that success, build.

** Pos Malaysia welcomes like-minded corporations interested in partnering with them to deliver a sustainable future to get in touch at https://bit.ly/3Ttp84L to explore collaboration opportunities.