A large number of domestic courier service providers are considering price increases of around 10% in the coming period due to rising costs and Romania's infrastructure, which is in poor condition.
"Prices are expected to rise by around 10-20% due to rising labour costs, as well as Bucharest traffic, which affects productivity. We must take into account the fact that Bucharest accounts for around half of the courier volumes countrywide," said Octavian Badescu, general secretary of the Association of Courier Operators in Romania. Labour costs, Romania's bad roads, rising fuel costs and the high level of investments have forced Curiero (a major domestic player) to push rates up by more than 10% in October,
"Curiero decided to raise rates for its express delivery service. The 10-30% rate increase will not be operated uniformly however, but for each customer, depending on the volumes of individual deliveries," stated Bogdan Carcu, Curiero chairman. According to him, maintaining low prices, below the market level, is no longer viable because of the changes the market has witnessed. "We expect our current customer portfolio for this service to stay at around 70% in the wake of the rate hike, without affecting turnover," stated Carcu.
As a result, while couriers previously strove to compete with low rates, customers' rising demands have made companies to boost their investments, which are reflected in falling profit margins.
TNT generates the majority of its domestic turnover from international delivery services, which, according to Bogdan Zafiu, country sales & marketing manager, prove more profitable than domestic services, which means he does not anticipate any rate increase in the coming period.
Several couriers operating in Romania, including Cargus and Fan Courier, saw their profit margins shrink during the first half of this year against last year. Thus, Cargus' profit margin this year fell to 5% compared with 10% last year. As a result, Cargus is considering a price increase in autumn, while Fan Courier is also preparing to raise prices this year.
Another player on the market, TCE Logistica, is mulling a price increase next year as costs continue to climb.
Last year, the Romanian private postal and courier services market confirmed its growth potential and reached 130 million euros, from 100 million euros in 2005, with most companies on the market boasting considerable turnover increases. After the first six months of this year, companies continued to witness 30% turnover increases, but profit margins are now expected to fall.
The main players on the international delivery services market are DHL and TNT, while the domestic delivery services market includes Fan Courier, Cargus, Curiero and TCE Logistica.
Courier market
Annually expands by around 30%, primarily driven by economic growth
Costs are rising with several companies facing reduced profit margins
Rates for domestic delivery services will rise by around 10% over the coming period to cover cost increases
Companies providing international delivery services are boasting higher profitability, according to market players
Turnover expected to go up by 20-30% this year
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
