[Weekly Preview] Faced with Cost-Cutting Pressure in All Segments, How Can the Logistics Industry Maintain Service Quality? (AI Translation)

【周刊提前读】物流各环节面临降本压力 如何不降服务水平？

1. The implementation of new delivery regulations, requiring express packages to be delivered to consumers’ doors without prior consent for placement in lockers or stations, has been unsatisfactory for both consumers and couriers. Consumers report minimal improvement—most packages are still placed in pickup lockers or stations—while couriers complain that phone communication and door-to-door delivery significantly increase their time and costs. Stringently following the new rules reduces courier efficiency and income, while non-compliance risks hefty fines if customers complain [para. 1][para. 2].

2. The revised “Courier Market Management Measures” (effective March 1, 2024) were designed to protect consumer rights but have led to increased logistics costs. Strict execution reportedly raises per-order costs by approximately 2 RMB, impacting e-commerce, especially low-value orders crucial for platforms like Yiwu’s small goods market. This could discourage small orders, reducing market vitality [para. 2][para. 3].

3. Though the last-mile delivery segment is highly cost-compressed in China, total logistics costs remain high. In 2023, logistics represented 14.4% of GDP (18.2 trillion RMB), compared to below 10% in developed countries like the US (7%) and Japan (5%) [para. 4]. Government plans aim to lower this ratio to 12.7% by 2025, but structural hurdles such as uneven resource distribution, long-distance transport of bulk goods, and a heavy industrial base make this goal challenging [para. 5][para. 6].

4. Achieving both consumer protection and cost reductions is inherently contradictory and requires innovations throughout the logistics chain. The railway system, which could dramatically cut costs (being nearly 25% cheaper than highway haulage), remains underutilized for domestic freight, with a rail share below 5% compared to the global average of 20%. The US has grown its rail share by 50% over 40 years, but China's has dropped by 75% [para. 7][para. 8].

5. Recent initiatives have pushed the state railway system to transform into a comprehensive logistics provider, integrating rail, road, and water transport, and establishing 40 logistics centers. However, skepticism remains regarding rail’s ability to win market share due to inflexible practices, a preference for large-volume (bulk) clients, and high ‘first-mile/last-mile’ costs that erase rail’s price advantage for small and medium clients [para. 9][para. 10][para. 11].

6. Cost-competitiveness has improved slightly with some regional rail bureaus piloting "door-to-door" coal transport with rates dropping from ~130 RMB/ton to <90 RMB/ton, matching or undercutting highway costs. Still, rail’s market share remains low: in 2023, rail transported 9.2% of total freight versus 73.7% for highways [para. 12][para. 13][para. 14].

7. Structural challenges further constrain rail reform: heavy industry demand (coal, steel) is shrinking, infrastructure upgrades such as dedicated rail lines are costly and slow, and most logistics centers are regional, complicating interregional movement. Only a tiny fraction of mines or logistics zones have dedicated rail access, and further progress requires substantial capital investment [para. 15][para. 16][para. 17].

8. Meanwhile, the highly marketized trucking sector faces its own pressures. Trucks handle 73% of all commercial freight, but driver incomes are squeezed (about 51% make less than 8,000 RMB/month). Digital freight matching platforms help but have not yet deeply penetrated the industry (with only ~15% market penetration) [para. 18][para. 19][para. 20][para. 21].

9. Taxation is another pain point. Local governments have competed for freight business with preferential tax policies, significantly lowering effective rates for trucking platforms and drivers. Central audits, however, have moved to ban these “tax havens,” increasing uncertainty and cost pressure in the industry. Higher national tax rates (9%) would eat into already thin margins, threatening the viability of network freight platforms and pushing companies to absorb greater costs or risk penalties from policy shifts [para. 22][para. 23].

10. The new courier regulations pose additional challenges for the entire express delivery sector, which handles over 1.3 billion parcels yearly with nearly 4.9 million couriers. Increased delivery requirements are raising costs, decreasing efficiency, and worsening courier shortages as compensation fails to keep up with workload increases. The direct-to-door requirement also risks making investments in pickup stations redundant, impacting infrastructure returns [para. 24][para. 25][para. 26].

11. Looking ahead, industry experts anticipate sorting express delivery services into product- and cost-based tiers—distinguishing standard and value-added door-to-door options—to balance consumer demands and cost pressures more sustainably. It is expected that three months after the new rules, market players will adapt by streamlining delivery splits and pricing mechanisms [para. 27][para. 28].