The parcel delivery industry, which was competing in 7-day delivery, has paused momentarily. The performance of CJ Logistics, which started 7-day delivery every day with O-NE to respond to Coupang, has been impacted by increased expense and a decrease in cargo volume due to consumer sluggishness.
Hanjin Logistics, a latecomer, is currently test-operating holiday delivery and plans to focus on stabilizing this pilot operation for the time being. LOTTE Global Logistics, which is reviewing the introduction of 7-day delivery, is also concentrating on its promised delivery service while observing the situation for now.
According to the parcel delivery industry on the 15th, CJ Logistics's revenue for the first quarter of this year was 2.99 trillion won, an increase of 2.4% compared to the same period last year, but operating profit was 854 million won, a decrease of 21.9% from a year ago.
CJ Logistics showed growth in the global business and contract logistics (CL) sectors, but the parcel delivery and e-commerce (O-NE) sector was sluggish. CJ Logistics explained that the increase in additional expense for payments associated with the introduction of O-NE daily from January was a contributing factor.
Ryu Je-hyun, a researcher at Mirae Asset Securities, noted that "CJ Logistics's improvement in operating profit may be possible starting in the third quarter of this year, but the expense burden from the 7-day delivery will not be completely resolved, and the reduction trend in the parcel delivery sector is expected to continue."
Latecomers are showing signs of pausing. Since the end of last month, Hanjin Logistics, which has been trialing holiday delivery in some areas of the metropolitan area and major cities, plans to focus on stabilizing this pilot operation for the time being.
Hanjin Logistics is facing conflicts with parcel delivery unions due to the introduction of holiday delivery. The Hanjin parcel delivery union plans to engage in protest actions, such as refusing returns, sending photos, and refusing to input scheduled times. Starting on the 20th, they have also warned of refusing items from major customers and an all-out strike.
LOTTE Global Logistics, which announced a review of the introduction of 7-day delivery, also stated it would observe the situation. After expanding its promised delivery service for corporate customers in the metropolitan area and major regions to desired time slots by 2027, it plans to review the introduction of 7-day delivery based on demand.
The parcel delivery industry believes that the demand is not sufficient for implementing 7-day delivery. While there is some demand from certain customers, mainly in e-commerce, it is not enough to offset the additional expense associated with holiday delivery.
CJ Logistics sees high demand from e-commerce and TV home shopping and is promoting the introduction of O-NE daily service focusing on these areas. However, only CJ OnStyle and NS Home Shopping, both group affiliates, have adopted the O-NE daily service.
An industry insider stated, "In home shopping or e-commerce, there are many small to medium-sized companies, but not many partners can bear the labor costs for holidays, so securing volume will not be easy."