'Unfair' competition practices in postal service sector

In addition, as there are currently no regulations on the floor price for postal services, including e-commerce services, it is proving impossible to control such radical price discounts.

Nguyen Truong Giang, of the Member Council at Vietnam Post Corporation (VNPost), said that during the five years from 2018 to 2022, the number of postal services had nearly doubled from 410 to more than 800, attracting both local and foreign players.

“Competition, however, has become increasingly stiff, leading to signs of unhealthy competition and division in the domestic postal market, and causing negative impacts on business performance, the quality of service provision, and customer benefits,” said Giang.

La Hoang Trung, director general of the Department of Posts under VNPost, noted that firms have consistently lowered prices, offering promotions, gifts, vouchers and even free shipping.

“Even though the service quality has been markedly improved, given the soaring number of parcels each day, now at nearly seven million, underperforming units do still persist,” said Trung.

Statistics from the Department of Posts show that the top 10 postal units in terms of market share have taken part in goods transportation for leading e-commerce sites.

The VPA reports that local postal companies are facing a wave of franchising and indirect investment expansion by cross-border e-commerce platforms and delivery companies, meanwhile, foreign-invested enterprises are constantly seeking ways to grow their market share by reducing shipping prices below cost, offering promotions, and increasing discounts.

Giang believes that local postal businesses will find it difficult to compete with these global delivery businesses.

Even major businesses in the market face multiple challenges when competing with large postal businesses with abundant investment capital from abroad.

The Ministry of Information and Communications (MIC) said that in its 2024 agenda that the Postal Law should be amended to regulate the new reality in the provision of postal services with a view to ensuring healthy competition and the sustainable development of the market.

A report from the MIC shows that last year, postal service revenue came to around almost $2.5 billion, up over 9 per cent on-year, of which e-commerce parcel service revenue surpassed $1.6 billion, accounting for about 64 per cent, and budget contributions approximated $243 million, up 0.5 per cent on-year.

2023 saw an estimated 2.5 billion postal items being delivered, up over 32 per cent compared to 2022, of which the volume of e-commerce parcels fetched around 1.85 billion, accounting for about 75 per cent.

Food delivery market looks to restructure The impairment of Baemin in the food delivery sector may open a new opportunity for the current players to conquer to gain the remaining market share.

Participants in food delivery bemoan hiked commissions The high commission rate for food delivery platforms is frustrating both store owners and drivers.

FedEx Express enhances intercontinental delivery services from Vietnam FedEx Vietnam slashes transit times: Southern Vietnam exports reach major Asian markets in one day, Europe in just two working days.