[비즈한국] CJ Logistics000120 is launching its 7-day delivery service starting this week, following the signing of a tentative agreement with the courier union and the agency association. This marks the first time in 31 years that CJ Logistics has modified its 6-day delivery system, which had been in place since the company started its parcel delivery business in 1993. Industry experts anticipate that the competition for market share between CJ Logistics and Coupang will intensify further this year.
Voluntary Participation by Drivers and Additional Holiday Fees... Final Confirmation in March
CJ Logistics is commencing its '7-day delivery' service. Since deliveries will now proceed normally on Sundays and public holidays, the 7-day service begins on the 5th, the first Sunday of the new year. However, rural areas with low delivery density are excluded from the 7-day delivery zones for now. CJ Logistics plans to expand the service nationwide in the future as the system stabilizes and volume increases.
CJ Logistics reached a tentative agreement on 7-day delivery on December 26 of last year after 10 rounds of lengthy negotiations with the CJ Logistics branch of the National Courier Union and the CJ Logistics Agency Association. Following this, a general vote was held among union members over two days on the 30th and 31st, and with 94.3% in favor, the 'Every-ONE' 7-day delivery service was finalized for implementation.
CJ Logistics first announced its plan to introduce 7-day delivery in August last year. It stated that it would push for the introduction of 7-day delivery starting in 2025 and planned to prepare an operational framework by October 2024. However, the finalization of specific agreements and operational plans was delayed as disagreements with the courier union and the agency association remained unresolved.
CJ Logistics, the courier union, and the agency association had been discussing issues regarding voluntary driver participation and additional fees for 7-day delivery. A courier union official explained, "If 7-day delivery is implemented, a rotational work system must be introduced, and agencies will need to organize shift teams. We focused our agreement on ensuring that drivers participate in 7-day delivery voluntarily and are not subjected to any disadvantages for doing so," adding, "We also continued discussions on the issue of additional fees for holiday deliveries and deliveries in other areas."
According to the tentative basic agreement, courier drivers are guaranteed voluntary participation in 7-day delivery. It was decided that they would not face disadvantages, such as refusal of contract renewal or contract termination, for not working on holidays/days off or for not delivering in other areas. Furthermore, as a 5-day work week for drivers is introduced, CJ Logistics promised to provide additional personnel support to prepare for labor shortages. Regarding holiday deliveries, a 25% additional fee will be paid to the drivers.
A courier union official stated, "We will test this for about two months according to the tentative basic agreement to verify the level of alternative personnel needed," adding, "We plan to finalize the collective agreement next March."
CJ Logistics agencies are also busy ahead of the implementation of the 7-day delivery service. One courier driver said, "Operating methods vary by agency. Since we cannot yet predict the volume on Sundays, some places have decided to have everyone report to work, while others are having 2-3 people work as a team and will organize rotation shifts after observing the actual volume."
As drivers have decided to participate in 7-day delivery voluntarily, some speculate that the success of this new system will depend on how many drivers can be secured for holiday shifts.
A courier union official explained, "We expected that the company would provide high additional fees, which would encourage drivers to work on holidays, but it is disappointing that the incentives were set at a low level," adding, "A 1.25x incentive applies for holiday work, and for deliveries in other areas, incentives of up to 1.25x are applied differentially based on the delivery grade. Since the additional fees are lower than expected, I wonder if driver participation will be high. We will need to watch the participation level for about two months."
A CJ Logistics official stated, "Currently, the volume on Sundays and Mondays is not high. We plan to supplement [the system] by hiring additional personnel as volume increases in the future."
Mixed Results with Naver035420, Can Synergy with Shinsegae004170 Be Achieved?
Industry insiders predict that the implementation of 7-day delivery by CJ Logistics will further ignite the competition for market share with Coupang this year. Until 2023, CJ Logistics maintained its position as the No. 1 player in the parcel delivery industry, with Coupang following closely behind. However, the industry believes that the market share of CJ Logistics and Coupang was reversed last year. Meritz Securities Research Center estimated that as of the second quarter of 2024, the market shares of CJ Logistics and Coupang were 28.3% and 36.3%, respectively.
Lee Jong-woo, a professor of business administration at Ajou University, explained, "The start of 7-day delivery is highly significant. Since many customers have used Coupang to receive products on weekends, CJ Logistics will likely be able to snatch some of Coupang's weekend delivery volume."
To keep Coupang in check, CJ Logistics previously partnered with Naver to expand its e-commerce volume. Since 2022, it has been operating a 'guaranteed arrival' service, allowing customers to receive products from Naver Smart Store on the same or the next day. However, the industry assesses that the Naver service has not secured enough volume to effectively challenge Coupang.
An industry official noted, "There aren't many sellers listed on Naver's guaranteed arrival service. Sellers have told me that the logistics costs for the service are quite high," adding, "People say that even two years after its launch, the service hasn't firmly established itself. It’s a pity that Naver or CJ Logistics didn't invest more to boost volume, such as by subsidizing logistics costs for sellers."
To counter Coupang, CJ Logistics also formed an alliance with Shinsegae. In May of last year, it signed a strategic partnership with the Shinsegae Group and is now handling parcel volumes for Gmarket and SSG.COM. In particular, with the recent announcement of a joint venture between the Alibaba Group and Shinsegae, there have been predictions that CJ Logistics will benefit. The analysis was that if Alibaba and Gmarket create synergy and increase volume, the transaction volume for CJ Logistics, which handles their parcels, would also rise.
However, some in the industry suggest that expecting synergy between Ali and Gmarket might be premature. Professor Lee Jong-woo said, "For synergy, it seems necessary to integrate the platforms and link Ali's visitor traffic to Gmarket. But since the policy is to operate the platforms independently even after the establishment of the joint venture, it is uncertain what kind of synergy can be created within the current system."