In recent years, four links and one access has been adjusting the price on the eve of double 11. Will other express companies follow up after the price hike by China Express?
Photo Source: Visual China
Zhongtong took the lead in announcing the double 11 price increase
Will prices fall back if they rise? According to Pengchao News, China Express has been exploring a healthier and more market-oriented pricing mechanism. In the past three years, China Express has taken the initiative to adjust its express delivery fees in peak season. Express charges after the peak season need to be formulated according to the specific circumstances of market changes.
Shuang11 on the eve of express price increase has become a routine. One month before Shuang11 in 2018, China Communications gave advance notice of the price increase on its official website. Subsequently, Yuantong also announced that it would adjust the price of express mail. In addition, from November 9, Yuantong has limited the weight of bulk express delivery to 10 kg or 20 kg in some areas and 30 kg in all areas. Shentong not only increased the price of high kilogram section, but also clearly stipulated that 30 kg and 50 kg express delivery were banned from November 11-16 and November 17-20, respectively.
After surpassing Yuantong in 2016, China Express has maintained its first position in the industry for three consecutive years. Its price adjustment may have a demonstration effect.
In the first half of the year, the unit volume of Zhongtong was 5.371 billion, with a growth rate of 44.58%, which was far higher than the average level of the industry, accounting for 19.35% of the express industry market share, ranking first. Income growth was driven by the substantial increase in package volume. In Q2 of 2019, the operating income of Tongtong was 5.424 billion yuan, an increase of 29.2% over the same period last year; net profit was 1.365 billion yuan, a decrease of -8.5% over the same period last year; the main reason was that 2018Q2 contained 425 million yuan of returns from Fengchao; adjusted net profit was 1.376 billion yuan, an increase of 25.6% over the same period last year.
Under the background of intensified competition in the industry, China Unicoms single ticket revenue declined. China Expresss single-ticket revenue fell from 1.84 yuan in 2018Q2 to 1.63 yuan in 2019Q2, down 11.30% year-on-year. CITIC believes that the decrease in single-ticket revenue is mainly due to the increase of subsidies to enhance the enthusiasm of package dispatch outlets, thereby expanding market share.
The Price War of Express Industry Is Not Continued
According to the data of the State Post Office, in 2010, a express delivery was between 24 yuan and 25 yuan, while in 2018, a express delivery was only about 12 yuan. Price for volume is the most direct means for express companies to seize market share, but when the cost reduction does not catch up with the price reduction, the companys profits will be eroded.
Zhejiang Yiwu is only a county-level city under the jurisdiction of Jinhua City, Zhejiang Province, but for many years it has ranked among the top three express business in China. It has a high degree of connection with e-commerce, which can reflect the competitive pattern of express delivery. Tianfeng Securities Research and Report shows that in August this year, Yiwu Regional Express unit price dropped significantly, from 5.22 yuan per ticket to 3.78 yuan per ticket. Yiwu is a microcosm of the price war in the domestic express industry.
Recently, four major A-share express companies, Shunfeng, Yuantong, Shentong and Yunda, have issued business briefings in August 2019. According to CITICs statistics, the average unit price of express tickets above August is 11.63 yuan, down 2.36% from the same period last year. According to the branch, the single-ticket revenue of Shunfeng decreased to 21.65 yuan in August, a decrease of 6.36% compared with the same period last year; the single-ticket revenue of Shentong, Yunda and Yuantong were 2.76 yuan, 3.20 yuan and 2.72 yuan respectively.
Photo Source: CITIC Construction Investment
In the first half of this year, the revenue of Shunfengs express logistics business was 47.637 billion yuan, an increase of 12.99% over the previous year, and its business volume was 2.017 billion votes, an increase of 8.54% over the previous year. According to data released by the State Post Office, the average growth rates of business volume and revenue in the express industry in the first half of 2019 were 25.7% and 23.7%, respectively.
Photo Source: Tianfeng Securities
According to Interface News, in order to seize the market, Shunfeng also launched special products for large e-commerce customers this year. In Yiwu, where the national express delivery price is low, the price of Shunfeng hit the bottom in June-July, reaching less than 3.5 yuan for small items within three kilograms. After the price war of express delivery in Yiwu market was suspended in August, the special price of SF Fung picked up slightly. At present, the lowest price is about 4 yuan.
From June to August this year, Shunfengs express logistics business grew by 15.8%, 22.6% and 32.8% respectively. In August, business volume increased significantly compared with the previous two months. Tianfeng Securities believes that it is mainly driven by preferential distribution.