Labour Practices in Cross-border E-commerce Logistics Warehouses – investigations from 6 separate warehouses - HackMD

🌰 In a Nutshell

From investigations on cross-border e-commerce warehouses in China, we found :

The COVID-19 pandemic since 2020 has resulted in substantial development in cross-border e-commerce business in China. Already prominent locally, the e-commerce cross-border counterpart seems to be stimulated by, on the one hand, increased overseas demand, and on the other, the maturing of US and European-based e-commerce platforms.

Fig. 1 Business-to-business & business-to-customer cross border e-commerce industry size and growth rate, 2016-2025 (100 million Yuan), Source: https://www.iresearch.cn

One outcome of this expansion is that cross-border logistic services are in greater demand in China. Both business-to-business and business-to-consumer logistics providers experienced steady growth rates over the past few years, with a further significant hike in growth in 2020. Second, the cross-border logistics business, previously dominated by DHL, FedEx, UPS, and the postal service, is now joined by strong local competitors such as 4PX Worldwide Express, Yanwen Express and Cainiao Smart Logistics Network Limited.

Fig. 2 Market share of direct delivery providers, 2016-2020. Blue: e-commerce specialists; dark green: international commercial couriers (DHL, FeDex, etc.); light green: postal services. Source: https://www.iresearch.cn

Fig. 3 Business scale of some of the logistics providers involved in cross-border e-commerce (Unit: 100 million Yuan). From left to right: 4PX Worldwide Express, YunExpress, Yanwen, SF International, CTS International Logistics, Jia Cheng International Freight Agent Company and Eastern Air Logistics. Source: https://www.leadleo.com/

The labour problems among local e-commerce logistics companies have not gone unreported. The use of dispatch workers, sometimes exceeding the limit permitted by law, is well known. The use of student workers in parcel centers, possibly with under-the-table agreements between logistics companies and vocational schools, have drawn much attention in national media since 2018[1] . Additionally, working hours for warehouse workers, especially during peak seasons, have been notoriously long. It is not uncommon to see complaints on online discussion boards, describing certain positions in parcel warehouses that are particularly hard and tiring, with high turnover rates. Whether warehouses oriented to the overseas markets are similar in their labour practices, is worth further study.

From April to August 2022, we visited 3 different towns (anonymized as Town A, B and C) under the jurisdiction of Dongguan City. Close to some of the largest container ports in the country, as well as Shenzhen Bao’an International Airport and Guangzhou Baiyun International Airport, the chosen sites focus on processing export-oriented parcels.

Of the sites, Town A and Town B contained logistics parks where multiple logistics enterprises operated. Enterprises that operate there were mostly logistics service providers specializing in cross-border services. The only exception was an in-house parcel warehouse for a mobile phone accessories brand (which also dealt with cross-border business). Besides SF Express, a publicly listed company well-known in China, 4PX and Yanwen are also experiencing significant business growth.

|Location||Company||Estimated workforce||Number of workers interviewed|

|Town A, Dongguan||Yanwen||Around 1000||1|

|Town A, Dongguan||SF International||Around 1000||3|

|Town A, Dongguan||ESR Gear (In-house logistics warehouse of the mobile phone accessories company)||-||1|

|Town B, Dongguan||4px Worldwide Express||800 perms, 1200 in peak seasons[2]||3|

|Town B, Dongguan||Cainiao||-||4|

|Town C, Dongguan||4px Worldwide Express||700-800||8|

Table 1: Logistics sites included in this investigation, their locations and estimated workforce. The workforce in two of the sites are more difficult to estimate, so a figure is not given.

In April, a preliminary site visit to various locales was conducted to identify spots suitable for worker interviews. During this preliminary visit, a small number of interviews were conducted, two of which are included to the final results. In August a full-fledged investigation had been conducted in the above sites, and a total of 18 interviews were conducted. As these two periods span across off-peak and peak seasons for some of these companies, we were able to identify differences in labour practices during off-peak and peak seasons.

Fig. 4 Front door of the 4PX warehouse in Town C.

Fig. 5 Exterior of the logistics park located in Town B, in which the 4PX and Cainiao warehouse was found. At the time of investigation, respondents said that out of the four floors only one is operated by 4PX, and the other three are being used by Cainiao.

Fig. 6 Exterior of the SF Express warehouse in Town A.

A total of 20 workers were interviewed in this investigation. 14 of them were male workers, most of whom between 20-30 years old, except one respondent who was 45. The remaining workers were women around 30 years old. This suggests a remarkably young workforce. Age discrimination exists in some of the warehouse hiring practices – two of them typically do not hire short-term employees over the age of 40, according to our respondents. However, even considering this factor the age group is relatively young in age. This is probably related to the high intensity of work, as well as the predominance of night shift work, which only younger ones can withstand. This will be discussed further in the following sections.

Fig. 7 Number of respondents by age group

Fig. 8 Number of respondents by length of service at time of interview

It is also worth noting that, out of the 20 respondents, 13 had been working in the company 1 year or less. Several of them had just started working in the warehouse 2 months prior, or less. This implies a high turnover rate, especially for dispatch workers – most likely related to warehouse hiring that concentrates on dispatched temporary workers. This is even more prominent during peak seasons, which will be discussed below.

The warehouses we visited are mostly processing hubs for small to medium-sized parcels. Warehouses receive pre-packaged parcels from intermediary stations, trucked to the site on a regular basis. Workers then sort them according to their size and weight, label them, scan the barcodes to register them on the tracking system, and then send out the parcels for further transportation.

Most frontline employees are divided into a few positions: sorters, haulers, barcode labelers and scanners, truck loaders or “warehouse managers” – a position that keeps track of inventory and reports to other departments. One exception was at phone accessory manufacturer ESR Gears: packaging is involved in the site as well. This is not common in other warehouses: usually packaging would be done at the drop-off points. Besides the listed positions, we also talked with a truck driver working for Cainiao Smart Logistics Network.

|Position||Description of Work|

|Sorters||Receive parcels from the conveyer belt and gather them into their corresponding carts according to their size and destination.|

|Haulers||Haul carts of products around the warehouse floor.|

|Barcode Labelers and Scanners||Apply labels specifying the parcel’s destination and recipient, scan label barcodes to register them in the online system.|

|Truck Loaders||Load and unload trucks that carry the parcels between different processing points.|

|Warehouse Managers||Keep track of inventory status, record abnormalities and report to middle management.|

Table 2: Some of the warehouse positions observed during investigation and description of work. Note that the position name and actual division of work may slightly differ in different companies.

Those who worked as sorters, labelers and barcode scanners work either seated or standing. Others, including parcel haulers and “warehouse managers”, have to walk around the warehouse constantly. However, according to our respondents, the movement of heavy parcels are uncommon – in those cases machines are usually used to help. The work of the different positions is intense in their own ways. For example, respondents #4 and #7, both in charge of putting labels on packages and scanning them, said that even though they work seated, they “have to stick labels and scan them non-stop.” Respondent #6, a sorter, said that each of them had to sort 400-500 parcels each hour to meet the minimum target. For “warehouse managers”, as respondent #14 says, 20,000 – 30,000 steps at work each day is common. Respondent #15 complains about being sore in her arms, shoulders, neck, back and calf, especially during peak seasons, when she “felt so tired she could not sleep well.” She, however, did not think it severe enough to require a physician’s visit.

Air conditioning is mostly only available in office areas, not the warehouse floors – there, only electric fans are available. This results in indoor temperatures that are dependent on the weather and time of day. As respondents #1, #2 and #3 say, in their four-story warehouse, the fourth floor is always the hottest, especially for day shift workers. High temperature bonuses are available in some of the warehouses, such as according to respondent #10, but the working day will not be shortened during particularly hot periods.

The hiring practice of those companies involve a usage of temp workers hired through dispatch agencies. Throughout the investigation, 11 of our 20 interviewees were temp workers hired through agencies. A comparison of the terms of employments between formal employees and temp workers in 4px’s Shenzhen plant may indicate their differences.

|Interviewee #||Employment status||Direct Employment / Agency||Position||Length of Service||Wage Scheme||Social Insurance|

|4||Formal||Direct Employment||Labeler||Between 6 months – 1 year||Base salary + piece rate||Yes|

|5||Temp||Agency Dispatched||Sorter||2 months||Base salary + Hourly wage||No|

|6||Temp||Agency Dispatched||Sorter||6 months||Base salary + Hourly wage||No|

|7||Formal||Direct Employment||Labeler||6 months||Base salary + piece rate||Yes|

|8||Temp||Agency Dispatched||Sorter||15 days||Base salary + Hourly wage||No|

|9||Temp||Agency Dispatched||Inventory Checker||More than 1 year||Base salary + Hourly wage||No|

|10||Temp||Agency Dispatched||Sorter||2 months||Base salary + Hourly wage||No|

|11||Formal||Agency Dispatched||Truck Loader||More than 2 years||Base salary + piece rate||Yes|

Table 3: Respondents from 4PX’s Shenzhen location and their terms of employment.

Temp status is greatly correlated to agency dispatching, although there are also formal employees hired through agencies. It is clear that though the Social Insurance Law applies to all employees, the company makes Social Insurance contributions for formal workers only.

As the table shows, temp workers tend to have high turnover rates. Indeed, except for interviewee #6, the one who had worked in the warehouse for 6 months, all other temp workers had been employed for less than 3 months at the time of interview. In the Cainiao and 4px warehouses in Dongguan, respondents claimed that temp workers who stay at the job for 3 months will be offered a 1-year formal employment contract. But in reality, according to respondent #12, this offer is not taken up by many temp workers, who usually leave in less than 3 months. The respondent himself was a recent graduate, and after working there for 3 months was considering quitting. It seems that working long-term in the warehouses is not appealing enough for those mostly young employees.

The temp workers’ lack of skill means that the piece-rate system applied to formal workers would not suit them. Instead, an hourly-rate applies, and management “would fire you tomorrow if you are too slow”, as respondent #19 said. The trial session for newcomers ensures this kind of dismissal is rare.

Dispatch workers constitute one of the major problems among labourers in the manufacturing industry – they are likely only nominally “dispatched”, more often they are recruited solely for employment in the warehouse. Apparently, the situation is not very different in the logistics field. Despite a 10% legal cap on percentages of dispatch workers in a workplace, dispatch workers seem to be numerous in some of the sites we visited – as interviewee #5 said, at least 30% of the workforce came from one agency alone. This may vary between warehouses, as a Cainiao employee told that over 90% of the workforce were agency workers, while the other 4px plant in Dongguan had mostly formal workers.

Having temp workers recruited by dispatch agencies accommodates the company’s fluctuating demand for labour throughout the year. However, this convenient arrangement reflects two problems that formal and temp workers face respectively. For formal workers, their incomes are heavily linked to seasonal demand. Having a wage predominantly calculated in piece rate, their incomes can fluctuate between 4000 Yuan to 7000 Yuan a month, and have been especially low during the months affected by sporadic COVID-related lockdowns. For temp workers, although their incomes are more consistent over a short period of time, their social security contributions have not been paid. Considering the total monthly wage of a temp dispatch worker to be around 6000 Yuan a month, they would be receiving no more than 5000 Yuan if social insurance contributions were made according to legal requirements. Finally, in cases of labour disputes, litigation is difficult because the employment relationships are blurred.

Basic warehouse workers earn 5000 – 6000 yuan monthly on average. As mentioned above, the wages of formal workers are dependent on their output, allowing companies to shift the costs induced by lack of orders to the workers. Under current wage schemes, both formal and dispatch workers are heavily reliant on prolonged working hours exceeding 70 hours/week – common among factories in south China.

The wage schemes of both formal and dispatch workers include a base salary of 1800 Yuan to 2200 Yuan monthly. This is approximately the minimum wage level of the area, and monthly wages never fall below this legal level. However, the minimum wage level had long diverged from the average wages earned by most workers after years of regional wage growth, and thus has lost its function in regulating labour wages. As a result, of the 5000-6000 Yuan they make, a modest amount for manual work, around 50% or more must be earned though incentives and overtime pay.

This gives employers the power to manipulate employee working hours beyond contracted hours. For the 8 dispatch workers we interviewed, their hourly wages ranged from 16-21 Yuan, mostly 18 or 19 Yuan. Without overtime and Saturday work, they would be making 5000 Yuan or less. As a result, their working hours, 10-14 hours a day, six days a week, appear to align with their own interests – those extra hours make their wages decent. And working hours during peak months always exceed the overtime legal limit of 36 hours per month.

Fig. 9 Hiring signs found outside 4PX’s Shenzhen warehouse. They state that temp workers’ hourly rate is 19 Yuan per hour, and “can reach around 6000 Yuan a month”.

For formal workers it is a similar situation. During peak seasons, such as large-scale promotion events for e-commerce platforms, their working hours also amount to 10-14 hours a day, 6 days a week. But here, proficiency also comes into play. Because their wages are calculated in piece-rate, more experienced workers may make more than 7000 Yuan, and a small fraction of the most skilled workers 9000 – 10000 Yuan. This is confirmed by 3 of the interviewees who are formal workers in their respective companies. Conversely, during off-peak seasons, especially periods when logistics were disrupted by COVID lockdowns, the small number of parcels they were assigned to process may lead to wages as low as 4000 Yuan or less. Hence the fluctuating nature of formal workers’ pay.

A two-shift system is adopted in most of the warehouses we investigated except for one. In practice the two-shift systems can have variations, either with a handover time (somewhere between 6 – 9 am or 6 – 9 pm), or with altogether separate hours, as in SF express where the day shift is 8/9 am – 8/9 pm and the night shift is 3/4 pm – 3/4 am. There are usually flexible start and end times since the number of parcels varies by day. During off-peak seasons, shifts are shortened and dependent on the arrival time of parcels. As respondent #7 expressed, the off-peak seasons are when working times are most irregular: they may be asked to work for anywhere between 4 - 8 hours a day, and may not be informed of their working hours until the day before. In addition, since the two-shift system would be suspended during off-peak seasons, the formal workers may be asked to report to work at vastly different times of the day, depending on the arrival time of parcels. “Sometime it’s a day shift; other times it’s a midnight shift”. Respondent #12, a dispatch worker, also recalled that they only had to work from 10 am to 5 pm in June, when parcels were few. But in effect, they were asked to stand by for the whole day but only paid for a few hours of the time they actually worked.

Throughout the investigation we hoped to discover more about the use of student workers. In reality, 7 respondents acknowledged the use of student workers in their workplaces, but just 3 knew how they were hired. This appears to be related to high turnover rate in the warehouses – most employees do not stay long enough to notice seasonal differences in the company.

The use of student workers is highly seasonal, either during school breaks (summer and winter breaks) or in October, when sales are stimulated by promotion events and festive demands. Student workers include independent job-seekers trying to make money when school is off, or they are sent by vocational schools to work in warehouses in groups within a designated period.

Apparently, student workers during the October peak are primarily sent by their schools. Respondent #7 from 4PX’s Shenzhen center told us that “they would be designated to the same set of dormitories, transported by specially arranged buses to and from work. Their hourly wages are 11 Yuan per hour, much lower than other employees.” According to our respondents, the wages of student workers may vary – some say 11 Yuan, some 15 Yuan, others 16 Yuan an hour – but they are usually significantly lower than normal workers. The separate management of vocational school student workers may also be a reason for workers’ obliviousness towards the student workers.

Vocational school student workers in factories have been widely reported on in Chinese media, that they are assigned to do low-paying and highly repetitive jobs that don’t contribute to their career prospects. Further, they are usually under threat of being ineligible to graduate if they refuse to do these jobs. Despite conducting most of these interviews in the summer, we were not able to talk directly with any student worker. Whether there is an element of forced labour must be further researched.

There is a systematic use of dispatch workers & avoidance of Social Insurance contributions.

Wage structures lead to 70-hour or more working weeks.

Low season stand-by is not compensated.

Student workers are widely used.

From their use of dispatch workers, wage schemes and student workers, it can be concluded that the labour practices in those logistics warehouses share many similarities with manufacturing industries. Each employ workforces of hundreds to a thousand in each location, and local authorities are likely aware of working conditions but choose not to interfere – another similarity with the manufacturing industries. Regarding the hiring of student workers, more investigation is needed to reveal the compensation and “educational” content purported and promoted by the vocational schools.

One particularity is the seasonal nature of the business. First, there are temp workers specifically hired to cope with peak season demands. Second, working hours vary between peak and low seasons. The “flexible working hour system”, either during peak or low seasons, benefits the logistics companies while depriving workers of benefits and compensations. Regarding compensation for stand-by time, and the definition of such hours, legal terms remain ambiguous, and past litigation on similar issues resulted in ambivalence by judges. This remains a field in labour rights to be explored.

For example, 百世快递被曝双十一“使用学生工”：一小时13块 集团Q3收入88亿元 ↩︎

递四方华南定制仓：建设智慧物流，提升双11时效, from baidu.com ↩︎