Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
CJ Logistics takes hit as AliExpress ends exclusive delivery contract
AliExpress Korea CEO Ray Zhang / Courtesy of AliExpress
By Park Jae-hyuk
AliExpress’s endeavor to establish new partnerships with Korean logistics firms has caused concerns for CJ Logistics. This development may potentially affect CJ Logistics' substantial profits derived from delivering nearly 80 percent of products purchased by users of the Chinese e-commerce platform here, according to industry officials, Thursday.
Such a skeptical outlook sharply dragged down the CJ Group affiliate’s stock price by nearly 10 percent on Thursday morning, although the share price inched up in the afternoon. It closed at 120,000 won ($91), down 6.76 percent from the previous session.
The online retail service provider, part of Alibaba Group, confirmed that it recently invited tenders to look for a company, which will handle customs procedures and deliver its products in Korea until May of 2025, once its contract with CJ Logistics ends in May this year.
“We are open to creating new opportunities with other Korean logistics companies,” an official at the e-commerce firm’s local PR agency said on behalf of AliExpress.
AliExpress previously selected its Korean partners without inviting tenders. Alongside CJ Logistics, Hanjin and Korea Post have delivered products sold on the Chinese e-commerce platform. Therefore, the Chinese firm’s latest move is widely interpreted as an attempt to reduce its delivery costs in the Korean market by instigating a price-cutting war among local logistics companies.
“With multiple logistics firms here, AliExpress is expected to try to reduce its delivery costs, once its sales volume in Korea grows further in the long run,” Hi Investment & Securities analyst Bae Se-ho said, although he added that the Chinese company would maintain its ties with CJ Logistics for a while.
CJ Logistics CEO Shin Young-soo / Courtesy of CJ Group
In light of Coupang’s recent decision to deliver all of its products through its own subsidiary, industry officials pointed out that Korean logistics firms may offer lower prices to attract AliExpress.
Hanjin, which terminated its contract with Coupang this month, has already been struggling to prevent a deterioration in its profitability through a new partnership with another Chinese e-commerce platform, Temu.
However, some industry officials said there are few alternatives to CJ Logistics in Korea, citing the amount of parcels AliExpress sends throughout the country. The Chinese firm expects 12.3 million packages containing its products to be delivered in Korea from March this year to March next year.
Although the actual volume is likely to be less than AliExpress’s expectations, Hanjin and Lotte Global Logistics are mentioned as the only two potential competitors to CJ Logistics, as they are equipped with the facilities and workforce to handle such a huge delivery volume.
“Even if AliExpress invites tenders, it will renew its contract with CJ Logistics this time,” a logistics industry official said.
CJ Logistics declined to comment on this issue, as the bidding procedure is ongoing.