Express Mid Year War: Master Fu Wants To Escape From "Price War"

        When Zhongtong express recently released its second quarter financial report, chairman Lai Meisong said, "it is neither wise nor sustainable to make unnecessary low price loss parts or exchange profits for short-term market share growth."

        This sentence is worth pondering. A year ago, under the impact of the epidemic situation and the double factors of new players such as polar rabbit, domestic express leading enterprises implicitly adopted the strategy of "exchanging price for quantity" to protect their market share.

      However, "a rabbit" sacrifice "price war" random fist, really let the "master" people miserable. Although the relevant regulatory authorities continue to intensify efforts to release the rectification signal, the "price war" seems to have become a chronic disease, and it is difficult to see the turning point for a moment.

As a result, when the State Post Office announced the operation of the postal industry in July this year, it was rarely mentioned that "the decline in the unit price of express delivery this month is due to the price changes of individual enterprises."

Under the cloud of "price war", the net profit of express enterprises in the first half of this year will inevitably decline, even fall into losses.

China Telecom's "escape"

In this year's mid year war, the vitality of leading express enterprises has not been fully recovered, and the profits have not returned to the track of positive growth.

Relying on the performance recovery in the second quarter, SF holdings made up for the loss in the first quarter to a certain extent, bringing the net profit of the first half of the year back to 760 million yuan (the same below). However, after deducting the non recurring profit and loss, the company still lost 477 million yuan.

The main business with the loss of Debang shares. Excluding nearly 200 million government subsidies, the company lost 159 million yuan in the first half of the year. What's more serious is Shentong express. In the semi annual performance forecast previously issued, the company expected the net profit attributable to the shareholders of the listed company to be a loss of 140 million yuan to 160 million yuan.

In contrast, the "report card" of Zhongtong express and Yuantong Express is relatively prominent. Among them, Zhongtong express achieved 13.798 billion yuan of operating revenue in the first half of the year, with a year-on-year increase of 33.72%; The net profit was 1.826 billion yuan, a slight increase of 0.15% year on year. In the first half of the year, Yuantong Express achieved a revenue of 19.495 billion yuan, a year-on-year increase of 33.70%; The net profit attributable to shareholders of listed companies was 646 million yuan, down 33.74% year on year.

It is worth noting that, excluding the impact of non recurring profit and loss, Zhongtong Express's net profit decreased by 2.49% year-on-year, which also indicates that the profitability of the main business in the first half of the year will be affected.

At least from the first half of this year, Zhongtong Express has become the "king of profits" of domestic private express enterprises.

This express company, the latest franchised express company established in Tongda express company, has written a legend of "catching up with the later". But even so, Lai Meisong is still "afraid" in front of "price war".

In the whole second quarter, Zhongtong express made 1.292 billion yuan. Although it doubled from the first quarter, its net profit fell by 10.78% compared with the same period last year.

Lai Meisong admitted that China Express gave up some business volume in the second quarter. During the reporting period, the company used 5.772 billion pieces of packages in exchange for a 21% market share. However, in terms of figures, the share of China express in the second quarter was lower than that in the first quarter.

"The small decline in market share this quarter is due to our selection of profitable volume." What's more, Lai Meisong's next sentence: "it is neither wise nor sustainable to make unnecessary low-cost loss parts, or exchange profits for short-term market share growth."

There are two signals behind this sentence: first, does Zhongtong express not want to fight a "price war"? Second, is it going to give up the "price for quantity" strategy?

The answer seems obvious. In the second quarter financial report conference call, an executive of Zhongtong express expressed the same view as Mr. Lai. "Zhongtong's strategy has been to accelerate the growth of business volume and expand market share on the premise of maintaining service quality and established profits for a long time."

If the decline in net profit of China express in 2020 is mainly due to the impact of the epidemic, then in 2021, when the negative impact of the epidemic on the express industry is gradually weakened, this can no longer be the main excuse to explain the decline in the net profit of China Express. The reporter of 21st century economic report noted that before the epidemic, Zhongtong express had maintained a positive growth in the net profit of its main business for many years.

From this point of view, it is true that Mr. Lai needs to rethink his business strategy.

In terms of the competition in the first half of the year, no domestic express company can say that it is a winner, including polar rabbit.

Under the "fierce price war", the whole express industry has fallen into a strange circle of "increasing revenue but not increasing profits". What's more serious is that in the express industry, which is already very serious in product and service homogenization, "price war" will only make the "internal volume" more serious, especially will bring the risk of network turbulence to the franchise express enterprises.

Looking for a way out

Zhongtong express wants to "escape" the price war, or to a certain extent, it can boost the early arrival of the industry price inflection point.

However, it is undeniable that the mud of "price war" can not be eliminated immediately in a short period of time.

According to the business data released by major express enterprises in July, in addition to the continuous growth of business volume of each company, the price of single ticket in the whole industry has gone down again. Among them, in the off-season in July, "Tongda system" express prices almost return to low. In particular, Shentong express, a single ticket price fell below 2 yuan.

"We believe that the end price competition among the" Tongda systems "has not been significantly eased, and the industry supply surplus is still the main contradiction. We will continue to wait for the industry to clear up and optimize the pattern." According to the analysis of Northeast Securities, it is hard to say that the turning point of price is coming, and it is still necessary to pay attention to the marginal changes such as the implementation effect of regulatory policies and the improvement of the profitability of individual bills.

The 21st century economic reporter learned that in the eyes of the industry, when the "price war" will turn point is full of uncertainty. Zhao Xiaomin, deputy director of the postal express special committee of Shanghai Communications Commission and an expert in express delivery industry, said in an interview with 21st century economic reporter, "with the sorting out of the market order, the protection of the legitimate rights and interests of courier groups, and the introduction of relevant policies such as green environmental protection in the express industry, and the regulatory intervention, the single price war mode of express companies can no longer be carried out, Express unit price is very low express enterprise market share will not rise, or even decline. "

For the future express unit price how to change, Zhao Xiaomin believes that there will be two stages, "one stage is, the express unit price will not show a linear decline; Another stage is, after the decline of the industry express unit price gradually decreases, it gradually tends to be stable, and then gradually reverses upward. "

In fact, for express delivery enterprises, before the uncertainty trend of "price war", what can be determined is to continue to control the cost.

The financial data of the first half of the year show that there is still room for improvement in the fine cost control of Shunfeng holdings, Zhongtong express, or Yuantong express, which has a market value of 100 billion yuan.

Take Zhongtong express as an example, at present, the transportation cost and distribution cost of single ticket in the first half of the year are 0.52 yuan and 0.31 yuan respectively. Among them, in the second quarter, the company's single ticket trunk transportation costs and distribution costs increased by 10.2% and 2.4% respectively. In terms of sales expenses, Zhongtong express spent 394 million yuan in the second quarter, an increase of 26.1% year-on-year.

"In the face of market competition, express companies need to make structural adjustments to the entire network, including operational changes." Zhao Xiaomin believes that "price war" is a representation of the competition among express enterprises, and more tests include the internal operation, network structure and team effectiveness of express companies.

The 21st century economic reporter noticed that the fine cost control of express enterprises is imminent.

The financial report of Yuantong express in the first half of the year shows that the gross profit of single ticket in express delivery industry has declined seriously. In the first half of this year, the company's gross profit per ticket was only 0.10 yuan, down 55.14% from 0.22 yuan in the same period last year.

In fact, the cost control of Yuantong express in the first half of the year has achieved some results. Under the influence of the recovery of refined oil prices and the cancellation of preferential policies such as highway toll remission, the transportation cost per ticket of the company in 2021 is 0.51 yuan, which is relatively flat compared with the same period last year. In terms of center operation cost, the company's per capita efficiency increased by more than 20% year-on-year during the reporting period. The operating cost of single ticket center was 0.31 yuan, down 0.02 yuan compared with the same period last year, with a year-on-year decrease of 5.52%. In this regard, Yuantong Express believes that "the cost reduction is closely related to the precise control of Yuantong transport vehicles and the innovative management mode of the transfer center."

However, refined operation is not the only solution for express companies to cope with price pressure. Finding a second growth curve has also become a consensus.

Yu weijiao, chairman of Yuantong express, said more than once in public that "express companies without airplanes are not real express companies."

Recently, the feasibility study report of Jiaxing airport in Zhejiang Province was officially approved by the state after the approval of Jingdong Cargo Airlines. Behind this, Yuantong Express intends to invest 12.2 billion yuan to build the only freight airport in the Yangtze River Delta to share the cake of air cargo.

Zhongtong express will extend its ecosystem to the field of logistics and real estate.

On August 12, Shanghai Tongyu Real Estate Co., Ltd., wholly owned by China express, was incorporated. It is reported that the establishment of the real estate company is closely related to the development of logistics real estate business by Zhongtong express.

Yan Huiping, chief financial officer of Zhongtong express, said, "in the second quarter, (Zhongtong express) capital expenditure was RMB 2.2 billion, of which nearly 70% was used for land acquisition and construction and upgrading of distribution centers. We are strengthening the basic capacity construction of core express business and the ability to develop comprehensive logistics services, so as to build a long-term ecological competitive advantage. "