Delivery Costs Up 19% in APAC: Bearish for Logistics & E-commerce

Delivery costs across India and the Asia Pacific region have risen by approximately 19% year-on-year between March and May. This increase is partly attributed to customers prioritizing reliable and convenient delivery schedules, even if it means paying more, over just speed.

This significant rise in operational costs directly impacts the profitability of logistics companies and e-commerce players. While customers are willing to pay more for convenience, the extent to which these costs can be passed on without affecting demand is a key concern for businesses.

Logistics companies like Delhivery (DELHIVERY) and Blue Dart (BLUEDART) are directly exposed to these rising costs, potentially impacting their margins. E-commerce platforms (e.g., those under RELIANCE, ZOMATO for food delivery) that rely heavily on last-mile delivery will also face increased expenses, which could pressure their unit economics and profitability.

Traders should monitor the quarterly results of logistics and e-commerce companies for signs of margin compression or successful cost pass-through strategies. Watch for any innovations in delivery models or technology that could help mitigate these rising costs. The elasticity of customer demand to higher delivery charges will also be crucial.

• •Delivery costs in India and Asia Pacific increased by about 19% year-on-year.
• •Increase occurred between March and May.
• •Customers in India prefer reliable delivery schedules over speed.
• •Many are willing to pay extra for convenient delivery options.
• •Risk flag: Inability to pass on increased costs to consumers