Commentary RESEARCH

Express Logistics Boom in China

Aria

2024-05-24 12:00

YANG SHUANGSHUANG
China Today

The improvement of infrastructure has allowed the express logistics network to extend from cities to villages, and from China to the entire world. 

Logistics is the last great unexplored continent of business, American guru Peter Drucker forecasted in Fortune magazine in 1962. And while production, distribution, circulation, and consumption make up today’s economic operations, many people in the 1960s did not realize the importance of circulation that centered on logistics.

After decades of growth, developed countries have taken the lead in modern logistics in the process of industrialization reform. With the deepening of reform and opening-up, China's logistics industry has also entered a new stage of development. This is evidenced by data from its State Post Bureau, which showed that express courier firms nationwide handled 132.07 billion parcels in 2023, up 19.4 percent compared to the previous year.

Enormous Volume

According to statistics, more than 641 million parcels were delivered across the country during the eight-day Spring Festival holiday of 2024, with the daily average delivery volume increasing by 82.1 percent compared with the same period last year.

“Express courier firms nationwide handled 132.07 billion parcels in 2023, a 14-fold increase compared with the 9.187 billion parcels in 2013. This figure has ranked first in the world for 10 consecutive years,” said Yang Daqing, deputy director of research department at the China Federation of Logistics and Purchasing. Express delivery has clearly become an important part of people’s daily life.

The amount of 132.07 billion parcels accounts for more than 60 percent of the total global express delivery. It is estimated that if each parcel was 0.3 meters long on average and connected end to end, they could circle the Earth's equator nearly 1,000 times.

China's super-large-scale market strongly supports this huge volume of express delivery. “China has the world's largest demand for express delivery of people's daily necessities, and also the world's largest manufacturing market for express delivery of means of production,” said Yang. This is also due to the large number of modern express enterprises. After years of development Chinese express company SF has become the fourth largest in the sector in the world, while Cainiao ranks first in the world in terms of cross-border express delivery.

E-commerce is an essential component that has facilitated express delivery growth. As early as in 2012 during the Double 11 shopping spree (China’s equivalent of “Black Friday” in the U.S.), e-commerce platforms generated more than 78 million parcels in one day. However, a large number of parcels were stranded at express delivery sites due to insufficient transport capacity, causing consumer dissatisfaction. Since then, China has successively introduced a series of supportive policies, and the logistics industry has been keeping pace thanks to the development of e-commerce.

SF, STO, and other leading express companies were founded in 1993, and ushered in rapid development after China's logistics market was fully opened to the outside world in 2005. Private express companies were legally constituted in 2009, and the Double 11 shopping spree ushered in accelerated development.

"China has become a veritable great power of express delivery,” said Gao Hongfeng, president of the China Express Association, at the fifth China (Hangzhou) International Express Conference on November 22, 2023.

Smarter and Greener

The application of digital and artificial intelligence (AI) technologies have further promoted the quality and efficiency of the logistics industry and created new development opportunities for China's express delivery companies. According to the Global Express Development Report (2023), digitalization and intellectualization help the express industry to fulfill contracts more accurately and efficiently, and help express delivery companies embrace new development opportunities upstream and downstream in the industrial chain.

“Going digital and intelligent is the major development trend for express delivery companies, which will eventually develop into smart logistics and supply chain service enterprises. During this process, the current transformation and investment are mainly focused on platform capabilities, network channels, warehousing and distribution capabilities and other major aspects,” said Yang, adding that half-day delivery, same-day delivery, and next-day delivery have also become the norm of express delivery.

Express enterprise’s including SF, Cainiao, and JD Logistics are moving towards platformization, using big data, cloud computing, AI, and other technologies to build smart logistic to promote intelligent supply-demand matching. Network channels are the lifeline of express delivery enterprises, and the construction of service network resources, combining physical networks and digital networks, is still the focus of investment of China's express delivery enterprises. In addition, warehousing and distribution capacity is key to improving the services of express delivery companies, and is also a key area of technology investment.

Furthermore, saving resources and environmental protection are also one of the key tasks of the express delivery industry.

According to the Action Plan for Advancing the Green Transformation of Express Packaging issued on December 15, 2023, by the end of 2025, the green packaging standard system for express delivery will be fully established, the requirements for prohibiting the use of toxic and harmful express packaging will be fully implemented, the standardized management system of the express delivery industry will be operational, and the green transformation of express packaging will be basically realized.

A number of express companies have launched green initiatives to make packaging recyclable. China Post has set up recycling devices for packaging waste at many outlets, ZTO has cooperated with a third party to produce green packaging bags, and JD Logistics uses recyclable insulated turnover boxes to replace disposable foam boxes across the country.

“Although China's express delivery is more convenient, smarter, and greener, due to the prominent problem of market fragmentation and competition, the yield of the leading express delivery companies is weaker than that of enterprises in developed countries, and the international network layout is not perfect, so the comprehensive competitiveness needs to be further improved,” said Yang.

Accelerating Extension

China has achieved its goal of covering all administrative villages with direct postal services. It has built a modern logistics system of “channel + hub + network,” with more than 230,000 delivery outlets and an average daily service volume of more than 700 million people. According to the World Bank's 2023 Logistics Performance Index report, China's infrastructure ranking surpasses that of developed economies such as the U.S. and France.

The improvement of infrastructure has allowed the express logistics network to extend from cities to villages, and from China to the entire world. During the 2023 Double 11 shopping spree, millions of people watched the world's first live broadcast of cross-border logistics in Cainiao’s logistics park in Dongguan, Guangdong Province, and witnessed the entire automation process of cross-border parcels from warehouse packaging, sorting, and delivery, to transportation and boarding of international freight charter flights. As a result, Cainiao Global Express has created the fastest global express delivery service.

“With the advancement of the Belt and Road Initiative and the in-depth integration of China's industry into the global industrial chain and supply chain, China's express delivery industry will usher in new growth space,” said Yang, who believes that China's express delivery market still has growth potential, and cross-border e-commerce will drive rapid growth of international express delivery.

To fully leverage its regional advantages and favorable policies, Xinjiang has vigorously developed new business formats such as cross-border e-commerce, and strived to build a cross-border e-commerce industrial park. In 2023, the Xinjiang border city Alashankou began operating a 28,000-square-meter cross-border e-commerce sorting and customs clearance center. It also independently developed a cross-border e-commerce comprehensive service platform and an international logistics hub information service platform, and has connected them with the Urumqi Customs Data Sub-Center and Xinjiang E-Port. This has promoted the construction of six major systems of information sharing, financial services, intelligent logistics, e-commerce credit, statistical monitoring, and risk prevention and control.

By vigorously developing the “Internet + foreign trade,” and maximizing its role in the shortest railway transportation line connecting Central Asia and Europe, Alashankou can deliver export goods to Europe in 12-18 days. The region has successfully attracted a number of internationally renowned e-commerce platform enterprises such as Alibaba, Amazon, and eBay. The platforms serve more than 507,000 e-commerce companies in total.

According to data from the Ministry of Commerce, China's cross-border e-commerce imports and exports reached RMB 2.38 trillion in 2023, up 15.6 percent year-on-year. Exports totaled RMB 1.83 trillion, up 19.6 percent year-on-year.

Thanks to the vigorous development of China's foreign trade, the international logistics channel is expanding in a rapid way.

 


]]>

2024-05-27 11:26
59
Immense potential for a green economy