Israel's Delivery Sector Faces Squeezed Margins Amid Surge
Israel's parcel delivery sector is struggling with shrinking profit margins, rising costs, and maritime disruptions, threatening higher shipping fees for consumers.
Israel's delivery and logistics sector is facing a severe profitability squeeze amid booming e-commerce activity, rising fuel costs, chronic driver shortages, and escalating maritime transport disruptions. According to estimates by the logistics platform Zipper, part of the Katz Group, the Israeli delivery market handles between 200 million and 250 million parcels annually, growing at an average rate of 14% per year. The final-mile delivery sector alone generates between 10 billion and 11 billion shekels annually.
Mounting Pressures and Global Bottlenecks
Despite the surge in package volumes, companies warn that profit margins have plummeted to between 1% and 3%. Zipper CEO Gal Halperin notes that the growth in business activity does not guarantee a parallel increase in profits. Delivery costs for an online order range from 25 to 70 shekels, driven by distance, volume, and weight. Meanwhile, the Houthis' attacks in the Red Sea and regional tensions around the Bab el-Mandeb Strait have severely disrupted maritime routes. Nimrod Magidov, CEO of RedBox Parcel, explains that shipping times from China have doubled from 20-25 days to over 45 days as vessels are forced to circumnavigate Africa.
Labor shortages and severe traffic congestion further cripple operations. Delivery drivers earn an average monthly salary of 10,000 to 12,000 shekels and complete around 40 deliveries a day, down from 80 a decade ago due to worsening traffic jams. Industry executives emphasize that structural changes and increased investments in automation will be critical to sustaining profitability and preventing shipping fee hikes for consumers.
