China's express delivery sector picks up, shows market potential

China's express delivery service companies handled 9.65 billion parcels in July, up 8 percent from a year ago, according to statistics recently released by the country's State Post Bureau.

Workers are sorting express delivery parcels in a warehouse of a major express delivery company in an industrial park in Lianyungang, east China's Jiangsu province, June 14, 2022. [People's Daily Online/Geng Yuhe]

Their revenue totaled 89.82 billion yuan ($13.02 billion), increasing 8.6 percent year on year.

The growth of the business volume of Chinese express delivery service companies showed a V-shaped curve. It dropped 3.1 percent and 11.9 percent in March and April, respectively, and then went up by 0.2 percent, 5.4 percent and 8 percent in the following three months.

The V-shaped curve indicated the strong resilience of Chinese express delivery sector, the huge potential of China's gigantic consumption market, and the vitality of the Chinese economy.

The V-shaped curve came from China's sound performance in COVID-19 control that released the potential for compensatory consumption and emptied inventory backlogs.

At present, over 300 million parcels are being handled across China every day, more than those in the same period last year. Thanks to the recovering express delivery sector, the online retail sales of physical goods in the January-July period increased 5.7 percent year on year and accounted for more than a quarter of the total retail sales of consumer goods in the same period. In other words, the express delivery sector has become an important engine driving the stable recovery of the consumption market.

The V-shaped curve also came from the improved service capability of the express delivery sector. Thanks to the constant efforts made by express delivery service companies to optimized their services, fresh fruits that were once sold only in brick-and-mortar shops, such as cherries, figs and green horn long sweet melons, can be sent to consumers' doorsteps today with just clicks on their mobile phones.

Workers are sorting express delivery parcels in a workshop of ZTO Express in Malu township, Cenxi, south China's Guangxi Zhuang autonomous region, Aug. 4, 2022. [People's Daily Online/He Huawen]

In the first half of this year, 21.9 billion parcels were collected from and shipped to the rural areas, and the online retail sales of agricultural produce increased 12.4 percent year on year to over 290 billion yuan.

In particular, express delivery services have largely facilitated the trade of agricultural products this July when huge numbers of fruits and vegetables were hitting the market.

The express delivery industry, featuring a big size and strong quality, is creating many investment opportunities and driving synergetic development of industrial chains.

In July, the first professional cargo hub airport of China was put into operation in Ezhou, central China's Hubei province; a cold-chain distribution center started operation in Hefei, east China's Anhui province; the construction of a drone delivery base commenced in Beichuan county, southwest China's Sichuan province ... These projects will contribute to the diversified, intelligent and unattended development of the express delivery industry.

China has the world's largest express delivery business volume and the highest delivery efficiency, and the express delivery sector is the best testing field for automatic sorting lines, sorting robots, drones, unmanned delivery vehicles and other intelligent logistics equipment, many of which have been exported. This offers a desirable opportunity for enterprises on the industrial chain to achieve synergetic development.

An intelligent express delivery robot runs on a cable in Anyuan county, Ganzhou, east China's Jiangxi province, carrying agricultural produce, April 14, 2022. [People's Daily Online/Zhu Haipeng]

More importantly, express delivery companies are planning to set up logistics service centers at factories, so as to help the manufacturing sector lower transportation costs. They have developed a series of mature models of integrated development, and are providing information exchange services for manufacturing enterprises relying on their big data infrastructure, helping manufacturers improve work efficiency in procurement, manufacturing and sales.

Analyzers said that with logistics service centers set up at factories by express delivery companies, manufacturing enterprises can save at least 1/5 of logistics costs.

Such a model not only enhances the role played by the express delivery sector in industrial and supply chains, but also improves the competitiveness of relevant industries, offering solid support for the building of a new development paradigm.

The second half of the year is a peak season for express delivery companies. Given the improving situation of COVID-19 control and stimulus policies, the Chinese express delivery market will further enjoy its advantages in size, opportunities, resilience and policy dividends.