Courier firms expanding overseas

2019-01-03 16:59:33

courier companies

Industry giants establishing foreign joint ventures to strengthen global delivery services

When Mark Simon, a university student in Moscow, bought a China-made robot vacuum cleaner via a cross-border e-commerce platform, he received the parcel in just seven days through SF Express, a Chinese delivery services company.

Delivery along the same route used to take 30 to 40 days.

Cross-border e-commerce trade has been flourishing in China, with turnover rising 80.6 percent year-on-year to 90.24 billion yuan ($13.1 billion) in 2017, according to the General Administration of Customs.

The rapidly growing market has created numerous opportunities for Chinese delivery companies.

According to China's State Post Bureau, in 2017 the number of overseas express deliveries - which includes packages to Hong Kong, Macao and Taiwan - reached 830 million. That was a rise of 33.8 percent year-on-year, higher than the growth rate of the overall express delivery industry.

To meet the country's booming e-commerce demand, Chinese courier companies are developing their global delivery networks, establishing overseas logistics centers and launching international air freight services to help overseas buyers receive products faster.

The State Post Bureau said it encourages postal and courier companies to become comprehensive logistical operators and increase their presence overseas, as well as to strengthen the construction of international aviation delivery networks.

Ambitious plans

Top Chinese couriers, including YTO Express Group Co, SF Holding Co Ltd and ZTO Express (Cayman) Inc, are planning aggressive overseas expansion, while the global logistics market remains dominated by Germany's DHL, and the United States' UPS and FedEx Corp.

YTO Express is joining hands with Cainiao Network, Alibaba Group Holding Ltd's logistics arm, and China National Aviation Corp to build a new logistics center at Hong Kong International Airport, to enhance its global logistics capabilities.

The center will cover an estimated gross floor area of 380,000 square meters. It is expected to handle tens of millions of cross-border e-commerce parcels a year after it opens in 2023.

Last year, Shanghai-based YTO Express acquired a 61.75 percent stake in Hong Kong-listed On Time Logistics Holdings Ltd, which handles air freight forwarding business in Asia, Europe and North America.

YTO Express' international network now covers four continents, serving 50 countries and regions. It has more than 60 directly operated international delivery facilities and over 1,000 overseas agents.

Yu Weijiao, chairman of YTO Express, said Chinese couriers are thriving and the world needs Chinese services. In the future, more international flight routes will be launched to Russia, Malaysia, the Philippines and Japan, to offer quicker airline delivery services.

delivery services companyYTO Express Group Co launched a new freight route from Yinchuan in the Ningxia Hui autonomous region to Turpan in the Xinjiang Uygur autonomous region via Xi'an, Shaanxi province, last October. [Photo by Li Ming / For China Daily]

Another Chinese delivery giant, SF Holding, is accelerating its global expansion as well. It has announced a joint venture with logistics giant UPS to provide international delivery services from China to the United States, and eventually global markets.

"China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage," said Alan Wong, SF Group vice-president.

So far, the company's own delivery network reaches 53 countries and regions, with its small parcel delivery services covering 225 countries and regions.

ZTO Express announced in June that it will form a logistics joint venture with Turkish Airlines and Hong Kong's PAL Air Ltd to expand its global delivery network. The new venture will be based in Hong Kong with businesses including door-to-door logistics services, warehouse operations and order and supply chain management.

"We will continue to expand into overseas markets. The international business will be an important growth point for ZTO Express in the future," said Lai Meisong, chairman of ZTO.

Lai said the three parties will integrate their respective strengths and resources in global delivery, warehouses, cargo freight and aviation routes to explore business opportunities.

Globalized perspective

In addition to traditional courier companies, online retailers' logistics affiliates are also expanding globally. JD Logistics, the logistics arm of Chinese e-commerce giant JD, has invested heavily in establishing overseas warehouses and a delivery network. It has established more than 110 overseas warehouses in the past three years.

JD Logistics said it plans to build a transregional aviation logistics network, operate more than 20 self-run overseas warehouses and include more than 100 economies involved in the Belt and Road Initiative, with its business-to-business logistics network covering more than 300 cities, all within the next five years.

"In the future, we will export technology and solutions to more countries," said Wang Zhenhui, CEO of JD Logistics.

JD launched its Indonesia business in 2015. So far, it has established four warehouses in the country, with its delivery service covering seven islands, 483 cities and 6,500 counties, with 85 percent of the orders delivered in just one day.

According to the company, it aims to improve the circulation of commodities across Indonesia's many islands via drones later this year.

Its updated logistics system in Thailand will come into operation this month.

"We will step up efforts to export our supply chain services to the global market over the next 10 years," said Liu Qiangdong, chairman and CEO of JD, in an internal letter.

"In the past two years, we have begun our expansion in Southeast Asia, and will continue to expand our presence in Europe and the United States in cooperation with US tech giant Google," Liu said.

In June, JD and Google announced the latter will invest $550 million in cash in the Chinese e-commerce company. The partners will work together on a range of strategic initiatives, including the joint development of retail solutions in a number of regions around the world, including Southeast Asia, the United States and Europe.

"Chinese delivery companies' international push is still at an early stage. There are more opportunities to be tapped and the industry will become more regulated in the future," said Yun Mian, vice-chairman of the China Society of Logistics.

Liu Dacheng, deputy director of the internet industry research institute of Tsinghua University, said leading Chinese courier companies already have a globalization vision, but they still face many challenges, as transportation and labor costs are relatively high in overseas markets.

"Once the express delivery companies enter foreign countries, they should change their overall operation model. For instance, the demographic dividend represented by the cheap deliverymen in China will disappear, so logistics service providers face higher labor costs," Liu said.

Also, most overseas consumers live in suburbs and relatively scattered areas, so reducing delivery costs will become another challenge, according to Liu.


From: https://www.chinadaily.com.cn/a/201808/15/WS5b738838a310add14f385d8c_4.html

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