China’s Courier Giants Expand Delivery Fee Increases in Southwest China

(Yicai) March 25 -- Five major Chinese courier firms, including ZTO Express and STO Express, have continued raising delivery service fees this month after a sharp rise in crude oil prices, with the latest increase taking effect in Guizhou province after earlier adjustments in Sichuan and Yunnan.The latest move suggests the current round of fee increases is spreading across southwestern China and could be adopted nationwide by next quarter, according to an industry expert. The increases remain relatively limited, however, with the starting charge for each parcel rising by about 8 percent to 9 percent, Yicai learned.The five courier companies also include YTO Express, J&T Express, and Yunda Express. A person familiar with the matter told Yicai that implementation plans differ by province and are being tailored to local conditions, including how much customers are willing to accept.A manager at a courier outlet in Sichuan told Yicai the latest increase has lifted outlet revenue and called it “a positive development.” Still, it remains unclear whether the added income will eventually benefit delivery workers. The manager added that because the increase is small and several provinces have already raised fees since the middle of last year, customers have partly priced in the adjustment, and the impact on the industry should be limited.Zhao Xiaomin, a logistics expert, said to Yicai earlier that higher oil prices, rising outlet rents, and the rollout of measures aimed at curbing excessive price competition are all pushing delivery fees upward. He added that all provinces are likely to implement this round of delivery fee increases by next quarter.A manager at a J&T Express outlet in Yiwu, a major hub for small commodities, told Yicai that over the longer term the industry will have to move away from competing for market share through price cuts. Only by leaving appropriate profit margins for operators can the entire sector achieve healthy development, the person said.Zhao added that courier pricing needs to better balance the interests of courier companies, franchisees, and delivery staff. The industry’s previously loose management model must be reformed so that firms with complete service networks, strong data integration and supply chain capabilities, and more forward-looking management teams can stand out in competition.Editors: Tang Shihua, Emmi Laine