New era dawns for courier services

Beijing - China's courier service sector entered a new era with the public stock listing of all major players, Ma Junsheng, head of the State Post Bureau, says in an interview with Xinhua News Agency.

Overall prospects for the sector are excellent, but Ma points out some problems and calls for efforts to turn challenges into opportunities.

The year started with a big bang for couriers, which posted a year-on-year revenue growth of 6.2 percent, collecting 31 billion yuan ($4.5 billion; 4.2 billion euros; 3.67 billion) in January. On Feb 24, the listing of SF Express on the Shenzhen Stock Exchange made it the last of the top five private courier services to go public. Its share price then rose for five consecutive days.

"With more capital, the industry enters a new stage of competition and will embrace a shake-up in structure," Ma says. "Giants with all-around capabilities and reaches will emerge."

He called these the "aircraft carriers" of the sector, technology-laden heavyweights with high risk resistance, offering quality services without damaging the environment.

China has about 19,000 courier companies, most of which are vulnerable small businesses in a fragmented market. Capital inflow is revving up competition and forcing out players. SF Express, backed by the capital market, is likely to become China's answer to global leader FedEx.

By 2020, China expects to have become the world's largest express delivery market with a business revenue of 800 billion yuan. Powerhouses able to generate over 100 billion yuan a year will emerge, and the country will be home to at least two leading world brands.

Courier delivery, buoyed by prospering online shopping in rural areas and cross-border e-commerce, should be the next sector worth over a trillion yuan.

Following the listing of SF Express, photos of a courier standing next to the company's founder Wang Wei went viral on the internet.

In April 2016, the courier was assaulted by a man in Beijing after his electric tricycle struck the man's car. Standing with an ordinary deliveryman, Wang, one of the country's richest men, earned himself a groundswell of plaudits.

"The happiness and sense of belonging of deliverymen must not be neglected," Ma says, hailing Wang's respect for the rank-and-file.

The incident also cast light on a sector which relies on a vast legion of low-paid workers whose trips, mostly by scooters and tricycles, keep China's e-commerce revolution on track.

"They lack a sense of security and turnover is high," Ma says, recalling his visits to local courier service stations over past months. "Employers must improve pay and benefits."

China's courier service sector has expanded by 50 percent in each of the last six years, which has brought new challenges.

The sector is heavily dependent on e-commerce, with 65 percent of parcels generated through online shopping, says Zhao Guojun at Beijing University of Post and Telecommunications.

That reliance has meant a price war and squeezed profit margins, ultimately encroaching on the welfare of grassroots workers, says Xu Yong, an industry analyst.

As the reshuffle continues, profit margins are expected to drop further. Gross profits have plummeted from 30 percent in 2007 to below 10 percent. Besides, the sector needs to better integrate itself with manufacturing and agriculture, Ma says,

"The industry needs reform and innovation to turn today's difficulties into tomorrow's highlights," he says.

Xinhua