J&T’s race to the bottom in SEA logistics sparks backlash

J&T Express’ aggressive price-cutting strategy – which has seen it make significant gains in shipping volume and market share – continues to push its competitors to the brink.

In 2024, J&T claimed to be the top player in Southeast Asia for five consecutive years with a market share of 28.6%, according to its financial report. This number was up from 2023’s 25.4% and came despite the rapid growth of Shopee’s in-house logistics arm, SPX Express.

However, this victory might come at the expense of the industry’s entire ecosystem, leading to the possibility of government intervention.

J&T Express employees are preparing packages / Photo credit: J&T Express

Lai Chang Wen, CEO and co-founder of Ninja Van, says that price wars drive the industry into a “race to the bottom,” and “survival depends on who can slash prices the most.”

“A winner-takes-all mentality may optimize short-term gains, but it does so at the expense of long-term investments in innovation,” he tells Tech in Asia.

In Indonesia, the Digital Economy Logistics Association (ALDEI) says the current situation within the industry is already “not conducive.” The organization has also observed “predatory pricing” in certain rate offerings, although it declined to name specific companies.

“They are selling at a loss, causing competitors to collapse,” says Jimmi Krismiardhi, vice chairman of ALDEI.

To stop the bleeding, the Indonesian government plans to set a price floor in the logistics sector. Krismiardhi says the regulation has been discussed with logistics associations and approved by the relevant minister.

In a statement to Tech in Asia, J&T says its pricing strategy is driven by economies of scale, meaning “the larger the operations, the lower the cost per unit.” The company defends its approach, claiming it delivers competitive rates by “leveraging technology, automation, and proven operational strategies.”

Ripple effects

The rates offered by J&T are indeed the lowest among competitors – except for SPX Express.

J&T didn’t increase its rates when a fuel price hike forced other third-party logistics companies (3PLs) to raise theirs three years ago, according to a founder of an Indonesia-based logistics firm who requested anonymity.

This aligns with what J&T CFO Dylan Tey previously told Tech in Asia. He said the company can undercut rivals on price because it enjoys greater economies of scale from moving more parcels.

See also: J&T Express CFO reveals how it’s beating logistics rivals

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Endgame