South Korea’s parcel delivery service companies have expressed opposition to the National Agricultural Cooperative Federation, or NongHyup, over its plan to enter the delivery business.

“If NongHyup launches a parcel delivery service, it would lead to mutual destruction in the much saturated industry,” Park Jae-euk, chairman of the Korea Integrated Logistics Association, said during a press conference on Tuesday.

Representatives of domestic delivery companies such as CJ Korea Express, Hyundai Logistics and Hanjin Express who attended the conference released a joint statement saying that NongHyup would increase competition, leading to lower delivery prices. 

“We are seriously concerned about confusion and damages that NongHyup’s new business will bring to private delivery service companies and the logistics market,” Park said.

The recent mobile and online shopping boom has spurred annual growth of 10 percent a year for South Korea’s parcel delivery market, estimated to be worth 4 trillion won ($3.7 billion) in 2014.

The KILA said the average price per parcel fell to 2,400 won from 4,700 won in the early 2000s’ amid intense competition.

It said that if NongHyup entered the highly saturated industry, prices would drop further.

NongHyup refuted these claims, saying the average price for delivery services has fallen due to improvements in logistics systems and the growing number of Internet shopping orders, not because of overheating competition.

It also said that it had been reviewing the feasibility of the business since November in 2014 but nothing has been confirmed as yet.

The KILA expressed concerns that NongHyup could dominate parcel deliveries in the agricultural sector, in which demand for the service is growing, by using its broad distribution network, its outlets nationwide and government subsidies.

“The outlets and facilities of NongHyup were built for a public purpose. They can’t use them for revenue-making businesses like a delivery service,” a KILA official said.

“We will continue to strike until NongHyup scraps its plan to enter the parcel delivery business,” he said.

By Park Han-na (hnpark@heraldcorp.com)