Coupang launches logistics business, which will shake up the Korean logistics industry

Coupang launches logistics business, which will shake up the Korean logistics industry

It is reported that when market growth slowed down last year , CJ Logistics increased express delivery fees to improve profit margins, and its market share began to decline since then.

 

According to people in the domestic logistics industry in South Korea , the volume of parcel deliveries in South Korea is estimated to have increased by about 10% last year, about half of the 20.7% growth in 2020 , while the volume of express delivery in the first three quarters increased by 8.8% compared with the same period last year.

 

Sources said that as the local e-commerce market matures after years of rapid growth, the pace of U.S.-listed Coupang, which has expanded its business with its own logistics network, has slowed down. The better Coupang grows, the fewer packages logistics companies have to deliver. In 2021, Coupang's online market share may rise by 6% to 20%, according to Haina Financial Investment Co., Ltd.

 

It is understood that Coupang's rapid expansion poses a direct threat to CJ Logistics, raising concerns about the growth of the country's top logistics company. It is understood that its growth rate has exceeded the expansion rate of the entire industry, but it has not performed as well as the market. In the first three quarters of 2021, CJ Logistics' parcel delivery volume increased by 5.3%, significantly lower than 28.1% in 2020.

 

Industry insiders analyzed that the company raised delivery fees by about 10%, causing some customers to switch to smaller rivals Lotte Global Logistics and Hanjin Transport. As a result, CJ Logistics' market share fell to 48% last year and was above 50% in 2020.

 

Coupang aims to expand its business into providing delivery services for other e-commerce operators, leveraging the logistics network it has built by investing billions of dollars in its own business. It is expected to start offering delivery services soon.

 

It is reported that Coupang obtained government approval for the service through its logistics subsidiary Coupang Logistics Services .

 

It is understood that Coupang has recently recruited a large number of employees for third-party delivery services. "It is rumored that Coupang, which is still expanding its logistics network, has prepared tens of thousands of Coupang cars for third-party logistics services," said an industry insider. However , the company has taken a cautious attitude towards this rumor .

 

Coupang's entry into the logistics sector is expected to take a bite out of CJ Logistics given the e-commerce giant's aggressive moves in new markets .

 

Mirae Asset Securities sees Coupang's third-party delivery service as a major risk for CJ Logistics. Its stock price remains depressed even as the company's operating profit is expected to grow 9% to about 355 billion won ($298.2 million) in 2021.


South Korea

Coupang

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