KoneSi rides digital platform to lift Myanmar’s logistics sector
RETAILERS will no longer need to bother about logistics and fleet operators or worry about empty runs in Myanmar thanks to an innovative technical solution launched earlier this year, according to Soe Pyae Aung, co-founder and chief operating officer of KoneSi Freight Co.
“Logistics costs in Myanmar are among the highest in Southeast Asia, accounting for nearly 25 per cent of our GDP [gross domestic product]. So, if we are able to reduce logistics costs to a large extent, our products will be cheaper than ever, which will benefit end users,” he said in an interview.
“Unlike big transport companies, it is really hard for individual fleet owners and small freight forwarders to find customers. In the low season, they often have no customers at all. We want to get them connected with the supply chain so they always have a job at all times.”
The company has partnered more than 300 fleet operators to regularly serve some 30 businesses for their logistics convenience. Most of its regular customers are up and coming brands including Genius coffee, Maw Shan green tea, and Organic Farm pickled tea leaves, said Soe Pyae Aung.
The company usually handles nearly 400 transactions every month, with the main focus on logistics services in the Yangon region. It also provides city-to-city delivery services to serve customer demand. It now has seven team members and aims to open another office in Mandalay to cater to customers in Upper Myanmar.
“We are now enjoying a gradual growth of 30 per cent every month. But it is well below our target. We foresee a much bigger growth after we build a stronger network in Yangon soon,” he said.
Established in September last year, KoneSi optimises logistics by implementing a load-shared concept, connecting small and medium enterprises with individual truck drivers and owners if they need a whole truck or want to deliver their goods on carton-size basis. Its service includes picking up goods at clients’ places.
“We charge the client depending on volume and weight of goods and pick-up location. We also provide express pick-up service, which we can deliver within 24 hours. The price will vary, depending on how fast they want us to deliver,” said Soe Pyae Aung.
He said KoneSi also offers cash collection for its clients. The collected cash can be transferred to client’s preferred channels: cash handover, mobile money, mobile banking, etc. Its service includes management of returned goods from retailers to the businesses upon request.
“We have an impressive 100 per cent delivery fulfilment capability since we started load-shared logistics – we managed to deliver all the orders on time. For express service, we can deliver within 24 hours to where the clients want us to deliver,” he said.
“If the client wants to hire the whole vehicle to transport outside Yangon, we can connect any truck from the light duty trucks to 22 wheelers through our diversified network of truck drivers in Myanmar’s major economic corridors.”
The company has handled goods worth more than 1.1 billion kyats (Bt23.2 million) so far. The executive believes they have handled a much higher value of cargo from city-to-city transportation, though the value is not usually expressed in the clients’ packing list. Soe Pyae Aung was explicit about the challenges they are facing.
“Firstly, funding is our biggest challenge. We need more working capital because it usually takes a few days to get payment [for logistics services] from some businesses while fleet operators need to be paid once we hire their vehicle. Secondly, we need to educate the drivers and businesses so they can effectively use our technology platform.
Thirdly, limited use of digital payments poses challenges to us, because Myanmar is still a cash-dominated society. Last, but not least, finding skilled personnel with a start-up mindset is really challenging. As a start-up, we are less attractive to skilled personnel than big companies,” he explained.
He said it took a couple of months for the company to study about the supply chain and customers’ behaviour before they started delivery services to supermarkets, hypermarkets, restaurants and hotels. Now, it mainly focuses on delivering goods to warehouses, events, retail points and restaurants.
“We will ensure cost effectiveness and timely delivery. Businesses will not need to invest a lot in buying vehicles and hiring more staff for delivering their goods to buyers, while for fleet owners, there will be no empty runs by working together with us,” he said.
Soe Pyae Aung takes pride in the company’s achievement so far, though he is fully aware that they have a long way to go.
Kone Si clinched the Judges’ Choice at Top100 Myanmar Qualifiers held at Phandeeyar office in April this year, and represented Myanmar at Echelon Asia Summit 2018 held in Singapore in late June. Co-founder Zar Phyu Tint Lwin was among the finalists of WISE Women Innovation Challenge 2018, which recently kicked off in the Mekong region with the final round to be held in Vietnam next month.