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Courier company, paper price connivance or victim?
Apr 09, 2018

October 2017, an unusual day. The sales manager of a large express company, as in previous years, intends to apply for more corrugated cartons to cope with the double 11.

At this time, he found something unusual. On the material application page, the unit price of corrugated boxes rose by more than two. The manager has witnessed a lot of changes, expansion of outlets, alternation of colleagues and performance, but the price of corrugated boxes has not changed in the past few years.

At the same time, there were a few unusual things that were enough to make him remember this October.

Nine Dragons Paper Co., Ltd., a paper giant from Dongguan, has raised prices four times last month (cow cardboard, corrugated paper, and whiteboard paper).

Another paper giant, Huayin Technology, also announced this news. Behind them, there are large and small mills that are "outside".

Followed by the announcement of Zhongtong and Yunda price increases. Shen Tong took the opportunity to say that "we may also increase." After that, Yuantong suddenly became involved in the rumors - some people said that like the previous companies, Yuantong also increased the guide price for franchisees.

Zhongtong and Yunda claimed that this matter has nothing to do with the rise in paper prices. However, their franchisees may not like this argument, and every inch of paper purchased by the franchisee must be self-purchased (the vast majority of the aforementioned company's business comes from franchisees).

The sales manager of the Express Company is not expected to like it. If the quota has not changed, he will not be able to get the same number of boxes, and it is very likely that he will not be able to hold double 11.

This storm of price increases continues to this day and the express company is the undisputed victim. At the same time, courier companies may hold another identity - conniving at the rise of paper prices - not only because of their demand for this exuberant, but also because of long-standing indifference to environmental protection, and recycling in cartons On the matter. Now they will pay a price for this.

Why paper prices soar

Today, various parties have reached consensus on why paper prices have risen. The earliest date can be traced back to the "Water Pollution Control Plan" issued by the State Council in 2015. The decree requires that all production projects that do not meet the national industrial policy and have a serious environmental impact must be closed down by the end of 2016.

The environmental protection management of this project is unprecedented, but the cost is the increase in the cost of papermaking. In papermaking provinces such as Hebei, Shandong, and Fujian, only a small part of the paper mills on the market started. At certain times, some of their production lines are not allowed to open because of environmental protection.

In August 2017, the Ministry of Environmental Protection issued a new edition of the “Imported Waste Management Catalog”, in which the unsorted waste paper was adjusted from import restrictions to import bans, further changing the supply and demand relationship in the market. Not long after the publication of the Catalogue for the Administration of Imported Wastes, Luoyang Zhigui had a strange phenomenon in which someone could not buy paper at a high price.

“No one thought that it would rise so violently that it even caused a paper shortage. Downstream companies have money to buy paper.” Zhu Yong, vice chairman of the All-China Federation of Industry and Commerce Paper Chamber of Commerce, analyzed, “Of course, overall price increases are human factors. As a result of the combined effects of environmental factors and environmental factors, the current situation has been created.

Many people are very clear that the price of paper has risen so fast that it is almost a price for a day, but the supply side has limited exports, and that “stocking” is the obvious means of making money in this price increase.

With the unremitting efforts of these people and paper mills, paper prices have soared. The highest price of waste paper has reached 2,500 yuan/ton, which is even higher than the price of scrap iron or steel scrap.

No one is willing to sign a long-term contract. "We report prices once a week." A sales manager at Nine Dragons Paper stated that "old customers can give a little price discount, but they should also base on the latest prices in the market." "Nine Dragon Paper's share price rose from 2016 to 2017, and it has risen continuously for more than 8 months. It has more than tripled.

Courier company material costs soared

Today's express/Express companies that have already been listed have a rapid increase in revenue after 2015, and they will take a new step every year. The construction of these new steps is inseparable from the corrugated cartons that are used to package express delivery.

The financial data from listed companies can prove at any time that companies are expanding material costs every year, and the fact that the gross profit margin does not rise, or the growth rate of gross profit margin is far below the revenue growth rate.

The investment in the cost of these cartons cannot be categorized as investment. It belongs to the value-added behavior of enterprises providing express services, but under the premise of constant price in the consumer market, it becomes a heavy burden. For example, SF Express, which emphasizes direct operation and pursues a unified packaging, showed to the outside world in its 2016 financial report how astronomical figures are for each year's expenditures.

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