The major courier companies in South Korea are competing to become the business partner of the Chinese e-commerce giant AliExpress. This is because AliExpress is expected to handle around 80 million parcels domestically this year. For Korean courier companies, this represents a significant opportunity to expand their businesses.
In order to expand its presence in the S. Korean online market, AliExpress has launched a competitive bidding process to select a courier company for import customs clearance and parcel delivery services for a period of one year starting from May. The securities industry anticipates that AliExpress’s domestic volume of goods will increase by up to 80% from last year, with an estimated 80 million parcels to be delivered this year.
While S. Korean e-commerce companies are suffering due to Chinese companies targeting the market with low-priced goods, S. Korean courier companies view the influx of Chinese e-commerce goods as a new business opportunity. Therefore local courier companies are competing fiercely to secure as much of Ali’s volume as possible.
Ali sent a request for proposal (RFP) on Mar. 25 for customs clearance and courier services in Korea to major domestic logistics companies, including CJ Logistics, Hanjin, and Lotte Global Logistics.
Previously, CJ Logistics handled 80% of Ali’s deliveries in S. Korea, while Hanjin and Korea Post were responsible for the remaining 20%. However, Ali has now switched to a competitive bidding process, instead of selecting companies through private contracts as they did previously.
An industry official stated, “The volume of Ali’s parcels is growing rapidly, so there is a need to secure a favorable position through this contract.” The industry expects that Ali will proceed with the competitive bidding, but they will maintain multiple contracts to ensure the stability of the logistics system.
The concern over a potential price war among S. Korean courier companies highlights the risk of undercutting service prices to win contracts, which could negatively impact profitability. Meanwhile, Ali is expected to announce the bidding results in April.
A courier company official said that “Ali’s volume is growing rapidly, which could lead to price competition among domestic companies as Ali is in a favorable position in negotiations.”
