Chinese cargo delivery platforms are in the hot seat after failing to review driver credentials

Local transportation regulators in Shanghai summoned three major cargo delivery platforms on Monday for providing illegal transport services. The move follows the Ministry of Transportation’s tightening rules over the internet platforms and signals continuing scrutiny of the sector.

Lalamove and cargo delivery subsidiaries of Didi and 58.com were summoned by Shanghai’s Transportation Department, which said there is a rising number of cases where drivers are providing illegal freight services via the platforms. Examples include overloading cargo vehicles and transporting dangerous goods without proper licenses.

The three companies failed to review the credentials of drivers and vehicles registered on their platforms, the Shanghai regulator said on its WeChat official account. It ordered the three platforms to “rectify” these practices, which it called “damage that stems from disorderly expansion.”

The three cargo delivery platforms replied that they will comply with the regulations, and work with third parties to review the credentials of the registered drivers.

Top regulators in the country are in the process of implementing a slew of measures to tighten control on ride-hailing and cargo delivery platforms backed by internet firms. On January 21, the Ministry of Transportation summoned eight companies operating in the sector, including Lalamove, Meituan, and Didi, to warn them about unclear pricing schemes, rising membership fees, unfair competition, and illegal transportation.

The ministry also ordered the companies to protect the labor rights of drivers, who are often gig workers, by ensuring reasonable income and providing insurance coverage. This aligns with guidelines to protect drivers’ rights in the ride-hailing industry issued in December 2021, which demanded commission rate caps and better welfare for drivers.

Also in December 2021, the China Communications and Transportation Association, an industry body affiliated with the State Council, issued a set of new rules related to license reviews and cybersecurity for cargo delivery platforms.