KUALA LUMPUR (Oct 22): A race to the bottom is usually described as a situation where heightened competition between nations, states or companies causes players to sacrifice product quality or make irrational economic decisions, including dumping prices. 

The stiff competition in the local courier or last-mile industry is not new. The e-commerce boom, accelerated by the Covid-19 pandemic, has seen many foreign companies and startups with deep pockets setting up shops in Malaysia, vying for the same slice of the pie.

Presently, Malaysia houses 122 courier licence holders catering for a 33-million population, leading to the cut-throat price war in the industry.

Some courier players have already raised the white flag and exited the industry due to mounting losses. 

In an open market, competition is very much welcome, as consumers reap the benefits. But how far can the predatory pricing continue? 

Economists are worried that the quality of service could be compromised, affecting the sector’s development.

Meanwhile, analysts are underweight on the last-mile courier industry, as they expect the price war to continue, with new players coming into the market. How far can it go, as losses mount for companies with exposure to this segment?

Two years ago, in response to feedback from the industry, regulator Malaysian Communications and Multimedia Commission (MCMC) imposed a moratorium — which ended on Sept 15 — on new courier licences.

With the end of the moratorium, does the industry need more government intervention?

Read the story in our Oct 24, 2022 issue of The Edge Malaysia weekly.

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