Delivery firms facing losses

Online stores on e-commerce platforms -including taobao.com and tmall.com created some 180 million express -delivery orders Monday, giving courier service providers the busiest week of the year, according to data released Tuesday by China's State Post Bureau.

The data also showed that the country's e-commerce companies achieved a transaction volume of more than 40 billion yuan ($6.56 billion) on November 11, which is known as Singles' Day in China, and is now the world's biggest online shopping event.

During the annual one-day online shopping carnival, which was started by China's e-commerce giant Alibaba Group in 2009, vendors offer discounts of up to 90 percent to attract buyers to place a huge number of -orders.

The 180 million express delivery orders placed Monday marked an 85 percent increase from last year, the State Post Bureau said, adding that 80 percent of the orders came from Alibaba's Taobao Marketplace system, including taobao.com and tmall.com.

While courier service companies' busiest time usually comes two to three days after sellers have placed the orders on November 11, they have already handled 60 million orders Monday, the State Post Bureau said. In 2012, express delivery companies handled only 35 million orders on November 11.

"Express delivery companies will be challenged by the sudden increase in orders and also the need to deal with customer complaints," Yao -Jianfang, an analyst with the China E-commerce Research Center, told the Global Times Tuesday.

Several senior executives of courier service companies were quoted in a China Central Television (CCTV) report Tuesday as saying that the November 11 spree was in fact "a disaster" for their businesses.

Chen Xiangyang, the chief operating officer of Zhejiang TTK Express, said in the CCTV report that his company would make a loss of around 30 million yuan due to the shopping spree.

Xu Yong, chief consultant with China Express and Logistics Consulting, told the Global Times Tuesday that delivery companies will incur costs in hiring temporary workers, renting extra cars and renting more warehouse space to store the goods.

Some courier service providers have reportedly rented airplanes in order to shorten the delivery process and to prevent customers from filing complaints about the long waiting time.

However, Xu said that the companies are not able to lift the price of their services as it would risk losing customers, so they are more likely to make a loss than a profit due to the shopping frenzy.

"Even when the crazy three days following Singles' Day are over, -express delivery companies usually need to pay for the newly rented warehouses and cars for another few days since they could only sign one-week or two-week contracts with renters," he said. "The extra costs can easily eat up the company's small net profit, which is usually less than 1 yuan per order."

A courier surnamed Wang, who works for Yunda Express, told the Global Times Tuesday that he will have to work longer hours to meet the daily delivery goal, which could double in the next three days.

"On a usual day I deliver 80 packages a day, but I need to deliver at least 100 or up to 200 during the week following November 11," Wang said.