Hyundai Logistics hikes delivery prices by 20%

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Hyundai Logistics hikes delivery prices by 20%

Hyundai Logistics, the country’s second-largest courier, is raising prices for parcel delivery services ahead of the Lunar New Year next month, one of the busiest times of the year.

Officials at the firm said that the exceptionally low prices were negatively impacting the quality of services and livelihoods of couriers in the highly competitive industry.

“We must charge the new price to improve the working environment of those in the courier industry and also to provide quality service to our customers,” said Noh Young-don, CEO of Hyundai Logistics. “This hike will be an opportunity to achieve shared growth with courier workers and to save the industry from the verge of collapse.”

The increase, the first in 10 years, will see the base price for delivery increase from 2,500 won ($2.35) to 3,000 won - or 20 percent.

Other competitors, including No. 1 CJ Korea Express, are expected to follow suit, though no official announcements have been made.

Over the past 10 years, prices for delivery have repeatedly declined, according to the company.

The unit price of delivery service fell by 1,040 won from 3,500 won in 2000 to 2,460 won in 2010, it said. During the same period, the number of courier shipments surged 480 percent from 250 million boxes to 1.46 billion boxes a year due to the increasing popularity of e-commerce ventures like Internet shopping.

“As all kinds of businesses from large conglomerates to small and medium enterprises compete in the courier industry, we had no choice but to keep the price low,” an industry source said.

The low prices also took a toll on the company employees.

“As the courier prices continued to fall, so did the number of couriers quitting the job, and there has been no one applying to fill the vacancies,” a Hyundai Logistics spokesman said. “Also, 90 percent of them quit within one month of joining.”

The company repeatedly emphasized that the price increase was unavoidable considering the rising cost of overhead and the increased hardship suffered by couriers and subcontractors.

Hyundai Logistics will now await the moves of its competitors.

Industry leaders have long agreed on the need for a price hike, but one was never implemented due to concerns about negative reactions from customers. Hyundai Logistics will apply the increased charge to new customers immediately and to existing customers when their contracts come up for renewal.


By Kim Jung-yoon [kjy@joongang.co.kr]
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