AirAsia’s cargo and logistics arm Teleport—previously known as RedCargo—teamed up with VC firm Gobi Partners to co-lead a USD 10.6 million Series B investment round for Malaysia-headquartered e-commerce and parcel delivery startup EasyParcel.

Founded in 2014, EasyParcel is an online booking platform for parcel deliveries that allows users, mostly small and medium enterprises (SMEs), to arrange for delivery from multiple established courier companies at an affordable rate. The firm has a presence in Malaysia, Singapore, Indonesia, and Thailand, and it has an average shipping volume of one million parcels per month.

During a press event in Kuala Lumpur today, EasyParcel said that the funds would be used to leverage Teleport’s logistics assets and infrastructure capacities which include more than 10,000 AirAsia flights per week to over 100 cities. AirAsia’s fleet has more than one million tonnes of cargo capacity.

“We have a mission to address all the challenges in the last-mile delivery process and as most of our customers are small enterprises, they’re always looking for the best service providers at the best rates. So with this new funding and partnership, we can leverage on AirAsia’s huge network and assets to offer better service for customers,” EasyParcel CEO Clarence Leong said.

The firm wants to strengthen its presence in its existing markets and aims to reach a new customer segment, traditional SMEs, in addition to its online business customers.

AirAsia’s logistic opportunity

With its wide coverage in Southeast Asia, AirAsia will continue to explore its under-utilized assets to drive more revenue, which included monetizing aircraft belly space for cargo and logistics.

According to Air Asia’s CEO Tony Fernandes, passenger luggage currently occupies about 40 to 50% of the airplane’s belly space while the remaining 50 to 60% is available for cargo and logistics. However, the company currently only utilizes around 15% of its available belly space for the cargo business, leaving huge potential to expand.

“I’ve always believed that AirAsia’s logistics business can be a huge part of the social and e-commerce ecosystem,” said Fernandes in the press conference. “With this collaboration with EasyParcel, we unlock this potential and make parcel delivery across Southeast Asia more accessible for everyone.”

When Fernandes remarked that he hopes to see the revenue increase from the company’s logistics arm, Teleport’s CEO Pete Chareonwongsak, said that the company currently contributes about 4% revenue or MYR 400 million (USD 97 million) to the AirAsia Group and he aims to double this number to MYR 800 million in the next twelve months.

Chareonwongsak said that this investment will enable Teleport to accelerate the accessibility of logistics for SMEs using AirAsia’s assets while encouraging more collaboration with the logistics startup community in Southeast Asia. He also expects that this Teleport and EasyParcel collaboration will increase the utilization of AirAsia’s available cargo space by at least 5% and boost Teleport’s top line.

RedCargo was rebranded as Teleport on April 30. With 270 aircraft that fly to over a hundred cities, Chareonwongsak claims, Teleport is able to make cross-border deliveries and fulfillments possible in less than 24 hours.