Express companies see Q1 revenue growth

Medium-sized and large express delivery companies saw year-on-year revenue growth of nearly 40 percent in the first quarter of this year, the State Post Bureau said Thursday.

But industrial experts said the industry's profit margin is still being squeezed by rising labor and transportation costs.

Combined revenue of the delivery firms amounted to 21.61 billion yuan ($3.43 billion) in the first three months, up 38 percent from the same period last year, the bureau said in a statement Thursday.

"The industry's revenue growth is impressive, and it has been boosted by delivery business from increasing numbers of online shoppers in China," Xu Yong, chief consultant with China Express and Logistics Consulting, told the Global Times Thursday.

"But profit margins of domestic express companies are still as low as below 5 percent, because the competition is fierce and costs continue to rise," he said.

HTKY Express, a Shanghai-based private express company, raised prices for delivery services by 0.5 yuan to 1 yuan from April 12. The company said the price hike was mainly due to pressure from rising transportation costs after a national fuel price hike on March 20.

Shentong Express and Yunda Express also reportedly raised delivery rates at their branches in Hunan, Jiangsu and Heilongjiang provinces.

Employees with the customer service departments at Shenzhen-based SF Express Group and Shanghai-based Yuantong Express told the Global Times Thursday they had not received any notice to raise their prices.

"Some express companies are still taking a wait-and-see approach, because they are afraid of losing customers and market share if they raise prices first," Xu said.

But he predicted more express companies will follow the trend of raising prices in the coming months, as some smaller companies are finding it hard to survive at the present price level.

"Labor costs have risen fast, and they account for 30-40 percent of express companies' total costs," he said.

Price hikes by delivery companies will also hit online retailers.

"We have informed customers that express delivery fees might increase by 2 to 5 yuan soon," Tang Wei, a Shanghai-based online clothing retailer at taobao.com, said Thursday.

"After the price hike, we'll have to cancel free delivery services," he said.