China to become largest market for express deliveries
September 19, 2013 Category Express delivery, Logistics
China is expected to surpass the United States this year to become the world’s largest market for express deliveries, but analysts warned of rapid development that ignores quality. Ma Junsheng, director-general of the State Post Bureau of China, said at an internal conference on July 18 that China’s postal industry maintained fast, steady development in the first half. He attributed the trend to national economic policies and booming e-commerce. Express delivery volumes grew more than 50% year-on-year in each of the past 28 months, the Bureau said. The number of packages delivered by major courier companies rose 61% in the first half to 3.84 billion items. Couriers’ revenue grew 34.5% to CNY63 billion. Xu Yong, Chief Consultant for the express and logistics website cecss.com, said China will probably catch up with the United States in terms of mail and package deliveries this year, estimating that 8.5 billion to 10 billion parcels will be delivered in China in 2013, compared with about 9 billion in the U.S. “However, we see China’s development in the express industry as too fast and unhealthy. The country’s express companies sacrifice profit and service quality to pursue volume,” Xu said. Chinese courier firms are making CNY16.4 on average from every parcel, down sharply from CNY28.6 five years ago. “Companies’ profit margins are down to about 5% from 30% a decade ago. Some of them are losing money,” Xu said. Meanwhile, delivery workers struggle with heavier workloads but low incomes, as customers complain about bad service, he said. Bad service and lost parcels were major problems in the industry, according to a survey conducted in March by the Legal Daily. “In addition, express companies also sometimes conducted misleading promotions, engaged in unfair competition and operated without licenses,” said Liu Junhai, Professor at Renmin University of China. Transport Minister Yang Chuantang said that Chinese postal and express companies have to aim high and work fast to catch up with international leaders. “Revenue from the domestic express industry is expected to triple by 2020,” he said. “But we should first improve the quality of the service.”
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