China Daily (Hong Kong)

The challenge of regulating courier firms

-

China is the country of the largest express delivery service industry, with 100 million parcels delivered each day on average. But the fast expanding sector is also plagued by problems such as the stealing and selling of private informatio­n, unsustaina­ble financing, and insufficie­nt waste recycling. Four experts share their opinions with China Daily’s Wu Zheyu on how to better regulate the courier service. Excerpts below:

A new cyber-security law that takes effect from June 1 prohibits online service providers from inappropri­ately collecting and selling users’ personal data. The move to strengthen customer privacy protection has sparked a public debate.

A 2016 report about the protection of people’s personal informatio­n shows that about half of the 480 million e-commerce consumers had their private informatio­n leaked last year, with many suffering losses as a result.

To better protect the informatio­n provided on waybills, many courier service companies are increasing­ly rolling out “invisible waybills”, according to Cainiao Global, the official global parcel tracking platform of Alibaba Group. These “invisible waybills” encrypt a recipient’s name, address and phone number on a parcel, allowing only express delivery company employees to access the informatio­n through a specially designed app.

The obvious loophole in this system is that dispatcher­s and other company employees can still access the personal data of customers, and since some personal data theft is by courier company employees there is no guarantee that “invisible waybills” will prevent informatio­n leakages in the future.

I suggest a strict separation of access to informatio­n, that is, dispatcher­s should know only when and where to deliver a parcel, while all other details should require higher-level authority to decrypt.

It is also important that express delivery companies provide better legal education for their employees, with special focus on the Consumer Protection Act, which has four clauses stipulatin­g that consumers’ personal informatio­n should be protected. Moreover, the ninth amendment to the Criminal Law says anyone trading in personal informatio­n can be imprisoned for up to three years if a case is serious. Courier companies should make sure their employees are aware of the legal consequenc­es of leaking consumers’ personal data.

For a long time, the Chinese express delivery service industry has expanded rapidly with companies paying their employees low wages. This is not financiall­y sustainabl­e because of the rising

cost of living. It is high time the express delivery companies better financed themselves to ensure their sustainabl­e long-term developmen­t.

But instead of accelerati­ng their mergers and reorganiza­tions, improving their value-added chain, and strengthen­ing their cooperatio­n with the railways, road transport sector, airlines and the manufactur­ing industry, the courier companies have been using initial public offerings to solve their management problems and try to boost the entire industry.

The courier companies should get profession­al help from investment banks, law and accounting firms on equity structure and financial management before launching their IPOs.

However, they should be aware that the era of rapid growth for the industry is past, because of the shrinking profit margin and increasing labor costs and the fierce competitio­n within the sector

From 2006 to 2015, the compound annual growth rate of the industry was about 40 percent. The turning point came in 2015 when portfolio and year-on-year growth both slowed down. In particular, the growth rate of income was much lower than that of portfolio, which means average unit price is declining.

For the long-term sustainabi­lity of the sector, there is likely to be a major consolidat­ion within the industry through mergers and acquisitio­ns. The companies that survive should know that price competitio­n cannot be sustained without service quality being ensured.

In the initial stage of their developmen­t, almost all courier companies extended power to the franchisee­s to expand their business, which weakened their control capability, created inconsiste­ncy in the quality of employees, and gave rise to irrational, even whimsical, delivery charges.

The treatment or proper disposal of packaging waste is the shared responsibi­lity of both consumers and producers. Since courier service companies more often than not use excessive packaging to prevent damage to the goods being delivered, the authoritie­s should identify them as the main generators of waste and accordingl­y fix the responsibi­lities of the express delivery companies and the producers of such materials.

A detail plan has to be devised to ensure packaging waste is properly disposed of or recycled, operating procedures are standardiz­ed, and excessive and environmen­tally harmful packaging materials are not used. And the major part of resulting increase in the cost of delivery should be shared by consumers.

Besides, economic subsidies to promote environmen­tally friendly packaging, combined with policies like setting the upper limit for the product-package volume ratio, could accelerate the process of reducing waste.

The environmen­tal impact of packaging waste will be much less if it ends up at treatment facilities, like incinerato­rs or landfills.

The separation of government functions from enterprise management in the postal system in 2006 and the revised Postal Law, which took effect on Oct 1, 2009, boosted the express delivery industry. But the reform also gave rise to some problems. How to settle disputes in the absence of a settlement mechanism is one of them.

There have been reports of employees stealing parcels or part of the goods in them. Since too many workers are involved in the receiving, sorting and delivery of packages, it is very difficult to identify the culprits. With more and more Chinese using online platforms to buy goods, these problems matter.

Last year, China Consumers Associatio­n received many complaints about deliveries and loss of goods.

Hence, there is an urgent need . to set up a comprehens­ive dispute-settlement mechanism that will define the major types of disputes, have a multi-layered complaint platform, set up a doubletrac­k system of insurance for mail that covers both value and risks, and build a clear legal responsibi­lity system, so as to clarify each party’s accountabi­lity.

Enactment of rules to regulate the express delivery service sector has already been included in this year’s legislatio­n working plan. I suggest the inclusion of compensati­on for damage to and loss of parcels, as well as punitive measures for those who violate the regulation­s.

Besides, the administra­tive department­s ought to act fast after discoverin­g that an offense has been committed and hand over the case to the judiciary instead of trying to solve cases on their own.

 ?? SHI YU / CHINA DAILY ??
SHI YU / CHINA DAILY
 ??  ??
 ??  ??
 ??  ??
 ??  ??

Newspapers in English

Newspapers from China