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CJ Logistics, the No. 1 delivery company in the parcel delivery industry after Hanjin and Lotte Global Logistics (Lotte Courier), is raising the unit price of couriers starting next month. As a result, all’Big 3’courier companies with 77% of the domestic parcel market share have increased their parcel cost. The reason they raised the cost of parcel delivery was because the cost burden increased as a large-scale manpower was put in to implement the countermeasures to prevent overwork of parcel delivery drivers that were released earlier this year. It is predicted that small business owners who enter online shopping malls with poor bargaining power for parcel delivery will be the biggest hit.
CJ Logistics increased KRW 250
According to the parcel delivery industry on the 25th, CJ Logistics will increase the contract price for small parcel delivery by 250 won from 1600 won to 1850 won starting next month. Small courier is a courier with a sum of three sides of a box not exceeding 80cm and a weight of less than 2kg. This accounts for 70 to 90% of the total parcel delivery volume.
CJ Logistics first applies the increased price to new corporate customers. It plans to discuss a price increase next month with existing corporate customers. It is known that CJ Logistics has distributed a guideline containing this information to front-line agencies.
Due to CJ Logistics’ increase in the cost of parcel delivery, all of the big 3 courier companies’ small parcel delivery costs exceeded 1,800 won. Lotte Courier also raised the unit price of small parcels from 1750 won to 1900 won by 150 won earlier this month. From the beginning of this year, Hanjin has been offering small-sized packages of over 1,800 won for new corporate customers.
Expenses surged as a countermeasure for overwork
The increase in the price of parcel delivery was a’wishing’ that was impossible for courier companies. When the parcel service was introduced in Korea in 1992, the average parcel unit price, which was around 5,000 won, dropped to 2,229 won, a half in 2018. This is because there was a bleeding competition to lower the unit price to win the quantity of corporate customers, the’big hand’ that accounts for 90% of the parcel delivery market. In 2019, as parcel delivery companies tried to realize the unit price of parcels, the average unit price rose slightly to 2269 won, but fell back to 2221 won last year.
The background of the change in the current is the’social agreement for countermeasures against overworked courier workers’ that took place earlier this year. Political parties demanded that couriers increase the sorting automation facility and add additional manpower to solve the overwork problem that emerged after the Corona 19 crisis. Accordingly, CJ Logistics has increased the number of classification personnel by more than 4,000 and Lotte and Hanjin by more than 1,000 each until the Lunar New Year holiday. In the long run, it was decided to expand the sorting automation facility.
CJ Logistics plans to spend more than 100 billion won this year alone for this agreement. An official from the parcel delivery industry said, “Hanjin and Lotte Express, which lack automation facilities, will have to invest several trillion won in the long term.”
As competition intensified due to the emergence of new business operators such as Coupang, some analysts say that courier companies have stepped up price hikes to secure investment resources. Yang Ji-hwan, a researcher at Daishin Securities, said, “The sale of CJ Logistics’ stake in CJ Rokin, a Chinese logistics subsidiary, and an increase in parcel prices seem to be in order to secure a livestock against Coupang’s entry into the parcel business and aggressive investments.”
After some courier agency unit price increases
With this increase in delivery costs, small business owners who operate online shopping malls or enter open markets are expected to be hit hardest. This is because the bargaining power is inferior due to the small delivery volume. In’Because I’m Sick, I’m the President’, the nation’s largest self-employed internet cafe, there have been reports that some courier agencies have already raised the cost of parcel delivery.
On the other hand, large-scale companies, such as home shopping and e-commerce, are likely to suffer relatively little damage from higher parcel delivery costs. TV Home Shopping, such as Lotte Home Shopping, GS Home Shopping, and CJ O Shopping, did not receive any notice from the courier company regarding the price increase for parcel delivery.
An official of a home shopping company said, “Because we usually set an annual delivery unit price for the following year at the end of the year, all major companies’ delivery unit prices for this year are set.”
Reporter Noh Yoo-jeong [email protected]