Proposed courier fees win few fans

Levying new fees on domestic courier companies would do great harm to an industry where the profit margin is already very thin given fierce competition in the sector, experts said Thursday.

Recent media reports have said that the Ministry of Finance (MOF) is considering setting up a fund to subsidize some services run by the State-run China Post Group Corp, which has to provide remote areas with unprofitable universal postal services such as letter and postcard delivery.

Courier firms on the other hand, which mainly provide more profitable services, would be required to contribute to the fund in order to share the responsibility of universal postal services.

According to a proposal drafted by the State Post Bureau (SPB), domestic courier firms would be asked to contribute 0.1 yuan (1.6 cents) per intra-city parcel, and 0.2 yuan for each inter-city parcel. For international parcels, the contribution will be as high as 2 yuan.

"Courier firms will suffer a huge burden if the fee is levied, as the profit for each delivery is no more than 1 yuan," Xu Yong, chief advisor at China Express Consulting Website, told the Global Times Thursday.

Liu Jianxin, an expert from the China Communications and Transportation Association, noted that the potential fee would cost courier firms over 1 billion yuan this year, approximately equal to one-fourth of their total annual profit.

In 2012, domestic courier firms made around 5.69 billion deliveries, up 54.8 percent year-on-year, according to data from the SPB.

"The contribution will further grow as the market gets bigger," Liu noted.

The MOF was not available for comment Thursday and an official surnamed Yin at SPB said that he is not familiar with the matter as the fund is being initiated by the MOF.

The draft said that small courier firms with no more than 20 employees and sales revenue under 2 million yuan would be exempted.

"Courier firms may choose to break their companies into smaller ones to avoid the fee, which would be harmful to the industry's long-term development," Xu said, noting that overall delivery prices might be hiked if the fee were levied.

An official from courier firm Shanghai YTO Express declined to comment on the matter when contacted by the Global Times Thursday. But Beijing Business Today reported that representatives from leading courier firms had expressed strong opposition to the potential fee at an industry forum held in Beijing Wednesday.

In some European countries such as Italy and Spain, postal service operators must contribute 1 to 10 percent of their revenue toward similar funds. "But in those countries the market for universal postal service is fully open, so the government can charge all market players," noted Xu.

But in China, universal postal services are exclusively run by China Post. And Liu said that China Post makes a considerable profit from its other businesses, so it is unfair to levy the fee on courier firms, who now report very low profit margins.