THE top post at Singapore Post (SingPost) will soon be vacant again, as the national postal service provider undergoes a leadership renewal transition that its current chief executive Paul Coutts has agreed upon with its board.

 

Mr Coutts, 64, joined SingPost in mid-2017 from logistics company Toll Global Forwarding.

 

His roughly four-year-long stint is in line with the tenures of those who came before him.

 

Prior to his arrival, the CEO seat had been vacant for one and a half years after his predecessor Wolfgang Baier resigned abruptly in December 2015.

 

Dr Baier had helmed the top post for about four years, and the two head honchos before him each quit in under three years.

 

The position of CEO at SingPost is hardly an enviable one. After all, letter mail volume is declining globally. And although the volume of parcels being delivered is on the rise, the business of delivering those parcels is less lucrative and more competitive.

 

By the time Mr Coutts entered the scene, SingPost was well into its journey of transformation into an e-commerce and logistics player.

 

But someone needed to keep the company headed in the right direction.

 

Three months into the job, Mr Coutts unveiled his strategies to do so: winning in the home market, delivering full value from overseas investments, igniting future growth engines by capturing a greater share of global cross-border e-commerce volumes and driving cost leadership.

 

With a new leadership team including senior executives from the logistics industry, SingPost under Mr Coutts grew e-commerce market share in Singapore from 20 per cent to about 50 per cent. E-commerce now drives 65 per cent of its top line.

 

Also, investments in the Australian market are beginning to bear fruit after years of losses.

 

For example, parcel delivery provider CouriersPlease recently reported about a 50 per cent jump in revenue for the full year.

 

But the margin from e-commerce remains less lucrative than that from letter mail. Volume-related expenses for e-commerce have risen as the group handled more items, thereby eating into its already low margin in a space where venture-funded upstarts irrationally burn cash to gain market share.

 

Last month, the mainboard-listed company had delivered a disappointing set of annual financial results. Operating profit, net profit and underlying net profit excluding one-off items had all declined - by between 40 per cent and 47.7 per cent.

 

SingPost has been adamant about not getting volumes at all costs. But in a difficult environment, what are its options to get ahead?

 

The company is leveraging technology and re-engineering its infrastructure - including the possible introduction of smart letterboxes - to fit its e-commerce logistics business, boost efficiency and drive down costs. However, this will take time to feed into the company' s bottom line.

 

Mr Coutts appears to consider such initiatives as adequately setting the stage for his successor.

 

In a media release on his resignation, he said: " Having... worked with the executive team in setting SingPost' s strategic course for the next five years, I believe the time is right for someone new to lead the execution of that strategy and the next stage of SingPost' s transformation journey."

 

This successor faces a herculean task of improving the margins of SingPost' s e-commerce business in a very competitive landscape.

 

SingPost' s exclusive access to letter boxes has improved efficiency of its e-commerce deliveries, as its postmen would drop the small parcels along with mail into letter boxes, skipping the trip to the doorstep, and also making it convenient for the recipients who do not need to be at home.

 

However, this advantage that SingPost has is eroding with the roll-out of government-operated parcel lockers island-wide, including at HDB void decks, without exclusivity to any logistics service providers.

 

Mr Coutts' successor would have to act fast - partly because both net profit and underlying net profit of the company have almost halved, and partly because any new e-commerce business opportunities offered by the pandemic are being quickly gobbled up by hungry rivals.

 

Finally, the new CEO would need to do more to arrest the slide in SingPost' s share price. From a peak of more than S$2 in 2015, the stock has more than halved to close onWednesday at S$0.735.

 

As the company continues to evolve, engagements with shareholders and investors will be necessary - with regular updates on where SingPost stands in its transformation journey, how far it is from its goals, and how it is tapping substantial shareholder Alibaba.

 

The board, in its search for the ideal candidate, must be clear about what it wants from the new CEO. Mr Coutts had a relatively short time to turn around struggling investments while steering the firm' s transformation and keeping its eye on its national postal service business. What would be an acceptable timeframe for the new hire to accomplish what needs to be done now?

 

Consideration should also be given to the background of the next candidate. With a deep management bench of logistics experts, there could even be an opportunity to explore candidates outside of this field who could offer fresh perspectives.

 

Paul Coutts, group CEO of SingPost, has resigned to &ldquo pursue other opportunities.&rdquo

 

He will no longer be a director and will &ldquo support a handover&rdquo until Aug 31 or earlier.

 

&ldquo When I joined, the Board had tasked me to resolve legacy issues, re-imagine the postal landscape in Singapore, re-position the Group for profitable, accelerated growth in e-commerce logistics and, finally, build a new leadership team and put in place a succession plan,&rdquo says Coutts.

 

&ldquo Having delivered on those objectives and worked with the executive team in setting SingPost' s strategic course for the next 5 years, I believe the time is right for someone new to lead the execution of that strategy and the next stage of SingPost' s transformation journey,&rdquo he adds.

 

According to SingPost, the board and Coutts had agreed that a transition would take place this year. The board has started considering both internal and external candidates to replace Coutts.

 

Coutts, who was previously CEO of Toll Group Forwarding, was appointed to this job back in June 2017. Since then, SingPost shares have dropped by around 40% to close at 73 cents on May 31.

 

SingPost chairman, Simon Israel notes that Coutts joined the company at a &ldquo difficult time&rdquo . He had to deal with a significant decline in the domestic mail business, exiting the loss-making US e-commerce business, and navigating through the challenges of COVID-19.

 

&ldquo Paul has put in place a new management team and reset the Group&rsquo s strategy around high growth e-commerce logistics in Singapore and the region. We expect to see the benefit of this transformation in the years ahead and we wish Paul well,&rdquo says Israel.