Opinion
Courier business is 'chaos' due to public vs private uncertainty
By Xin Dingding (China Daily)
Updated: 2010-01-28 07:46
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The failure of the Shenzhen private courier company DDS is only the tip of the iceberg in the chaotic private express delivery business in China, experts say.
Unsure government policies, increased operating costs and cruel competitions are all causes for the private courier business plight, Liu Jianxin, deputy secretary-general of the delivery sector of China Communications and Transport Association, told China Daily.
The draft, which should have been adopted last year, had planned to make all letter deliveries under 50 g in the same city and all packages under 100 g between provinces become exclusive business of state-owned postal services.
"That means 80 percent of the current express delivery business will be moved into the hands of the state postal service, which is a big blow to the private couriers," he said.
The draft regulation was shelved after private couriers stood up against it.
Besides, the hike in oil prices is pushing up the private couriers' transportation costs, which usually amounts to about half of their total operation budget. Labor costs are also on the rise after the new labor contract law was adopted in 2008, he said.
But even with these rising costs, many private couriers dare not increase their prices, in fear of losing the market to rivals.
Xia Zubin, marketing supervisor of Shanghai-based Shentong Express, said that many private couriers adopted the low-price strategy in a bid to increase market share.
Most private couriers charge a price much lower than state-owned and foreign express delivery companies. While the state-owned EMS charges at least 20 yuan for a delivery in the same city, a private courier charges only 5 yuan.
