“When the oil price grows by 100%， the logistic industry will see a price growth of 40%， while the logistics industry a price rise of 35%， which means every price increase of 5% in the oil price will bring along that of 2% in this ndustry.” said Liu Zongsheng， General Manager of Itochu Logistics Co.， Ltd.， on the seminar “Focusing on the economic consequences of raising oil price， nterest rate and deposit reserve ratio”， which was held recently.What he said is on the mind of all others in this industry. With the oil price rising continually， the originally severely competitive industry is suff erng from the costs growth.According to a survey of key logistics enterprises in this country， the top 50 pulled in a total of RMB 450.6 billion in 2009; among them， the in- come of the largest enterprise exceeded a hundred billion yuan that year.T e latest data released by China Federation of Logistics and Purchasing show that， in 2010， the volume of China’s social logistics reached RMB 125 trillion， and increased by RMB 2.7 trillion， with a yearly growth of 21% and 16.7% respectively.However， extremely high costs have always been the biggest obstacle to the development of the logistics industry. In 2010， the income from logistics accounted for about 18% of China’s gross domestic product， twice the proportion in developed countries. The consumption of oil constitutes the bulk of the costs in this industry. According to general estimation， this part has taken up more than 40% of all costs. But with the oil price keeping on growing， in some enterprises， the oil consumption has reached almost 50% of the enterprises’ costs.Under this pressure， several companies have begun to raise their prices to shift this part of costs to their customers.As early as last October and December when the price of refi ned oil had been raised twice， private-owned logistics companies such as Yuantong and Shentong all increased their prices. According to the staff from Deppon Logistics， the price of diesel has risen by 3，410 yuan per tonne since June 2009， thus “to increase the price is a forced choice”.This staff told the reporter that Deppon Logistics had raised its trans- portation fee， growing by 6% at most. For example， the freight fee has increased by 0.08 yuan per kilogram for goods being delivered from Guangzhou to major cities. The company has declared in A Letter to Customers posted on its offi cial website that， “As the CPI and the company’s comprehensive costs on employees have been on the rise， the overall costs to run the company is growing correspondingly. Considering this， the company will make proper adjustment to the prices of transportation by truck from February 25.”It is known that for the time being almost all express parcels within 1，500 kilometers are sent by highway. The increase of transportation fee for highway directly results in the rising costs in delivering parcels. In fact， as early as before Spring Festival， Shentong Express and other companies had already untaken another round of price rises. The nationwide labor force shortage after the festival also made it difficult for these labor-intensive enterprises to hire employees. Thus， the income for deliverers has grown by nearly 20%.Under this circumstance， the oil price rise undoubtedly causes more pressure. A new round of price rises is brewing.T e reporter from has learned from the website of Shunfeng Express， a private-owned parcel service company， that since March 7 this year， the company will try to collect an extra service fee for collecting parcels at the customer’s residence. If parcels are being sent from somewhere within the allotted areas where the company decides to collect an extra service fee， and the customer is not sending parcels in bulk， then parcels going to the urban area， the suburb or within the province should be charged 3 yuan for every parcel as residence service fee， and is to be paid be the sending customer alone.Xu Yong， Chief Advisor of Express Consultation， thinks that under the infl uence of infl ation， rising labor costs and labor force shortage， the parcel service will see its price increase slightly this year， and some express companies will increase the service price by 10% to 20%.However， the pressure of rising costs will speed up the launch of a detailed Adjustment and Rejuvenation Program for Logistics Industry. As one of the rejuvenation plans for ten industries， Adjustment and Rejuvenation Project， released in March 2009， has never seen its detailed provisions come out to prop up the logistics industry.T e reporter with Investor Journal has learned from the 2011 China Logistics Development Report held not long before， after a survey lasting more than one year by the Logistics Survey Team， China Federation of Logistics and Purchasing and several other departments have reported the results of the survey to the State Council. The detailed provisions which are to be announced soon will hopefully provide a flat tax rate， reducing the business tax in all chains of the logistics operation.(Author: Investor Journal)
