In excess

New rules to curb couriers’ packaging waste


China faces a cardboard crisis

Chinese delivery companies transported 83 billion parcels last year, generating some 16 million tonnes of waste paper and packaging. Food delivery firms handled 17.1 billion orders, generating mountains of single-use-plastics in rubbish dumps around the country.

The government has been trying to curb some of the environmental impact of outflows like these, issuing more stringent rules to curtail the piling up of consumer lifestyle waste.

Some of the earlier directives are about to bite as cities and sectors strive to meet plastic and packaging reduction targets. This month the municipal authorities in Beijing announced that as of July 1 the manufacturing and sale of the following will be forbidden: thin plastic bags (less than 0.025mm), disposable bowls (often used for soup noodles), plastic ear buds as well as non-degradable plastic coffee stirrers. Single-use plastic cutlery is also to be prohibited in restaurants, although it will be permitted when ordering take-out.

In early April China’s State Post Bureau also launched a campaign to reduce the amount of plastic tape, filler and other non-reusable materials that is consumed by the booming parcel delivery sector. The drive – backed by new regulations issued in March – aims to reduce ‘secondary’ packaging by 80% by year-end. It also requires 20,000 recycling points at parcel delivery hubs.

Overpackaging has been a hot topic for some time, with recipients of parcels posting photos of the worst examples. One woman from Guangdong who ordered cheese slices online was surprised to have them delivered in a huge foam box with six icepacks, each of them larger than the block of cheese she had purchased. Another shopper from Beijing ordered a small metal tool from Taobao.com that arrived in more than a metre of bubble wrap so it wouldn’t rattle around in the oversized box it was sent in.

Others pointed out that vendors often use too much packaging because delivery companies are rough in handling the parcels. “The government should ban ‘violent delivery’ before it tries to reduce the amount of packaging,” one urged. “If parcels were delivered undamaged, no one would waste money on extra protection,” agreed another.

The new rules say couriers should “civilise” their operations and avoid “throwing, stepping on, and placing express mail on the ground to prevent damage”.

China has more than half a dozen major delivery firms, all of which have enjoyed stellar growth since 2010 thanks to the explosion of online shopping. But for one of the leading delivery services, SF Express, the rule changes are coming at a bad time, after it warned of a surprise first-quarter loss of up to Rmb1.1 billion ($169 million).

SF Holding reported a record-breaking profit last year amid the Covid-19 outbreak so the unexpected red ink has rattled investors, with the company’s Shenzhen-listed shares crashing the 10% daily limit for a couple of sessions. As of Thursday, SF’s market value had nearly halved to Rmb290 billion from a record high in mid-February.

Its boss Wang Wei has since made a public apology for the slump, blaming higher transportation costs (toll roads returned to charging standard fees after Covid was contained) and additional overtime for staff who worked during the Chinese New Year. Expenditures on new businesses also increased substantially, including a new unit specialising in e-commerce deliveries, as well as investment in a community group-buying programme on WeChat, called Fenghuotai.

“Negligence in management” was the ultimate reason for the loss, Wang added, promising that SF would improve its results in the second quarter, although full-year earnings might not return to levels seen in last year.

Jiemian said that investors are also unhappy that SF isn’t providing a clearer picture on its growth prospects. One concern, the news portal suggested, is more disruption ahead as a result of the introduction of “digital invoices”. This more environmentally-friendly way of settling commercial contracts has hit revenues in one of SF’s bread-and-butter courier activities, Jiemian warned, dragging down revenues further in the months ahead.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.