Logistics sees big efficiency boom

A Transfar Zhilian employee uses an internet app to sort deliveries in the company's warehouse. [Photo provided to China Daily]

As online shopping has become increasingly popular in China in recent years, the express delivery business has been influencing people's lives more than ever.

"What many people don't necessarily know is that express delivery only accounts for about 10 percent of the country's whole logistics sector in terms of turnover," Li Shangqing, assistant to the president of Transfar Zhilian said. The company is a publicly traded subsidiary of Transfar Group based in Hangzhou, capital of Zhejiang province.

As China is improving its manufacturing sector, upgrading related service industries could contribute significantly to accelerating the progress.

"The most important of these supporting industries is logistics," Li said.

Li Shangqing, assistant to the president of Transfar Zhilian. [Photo provided to China Daily]

Top of the company's list of ambitious plans for a bigger logistics business is building a smart logistics information system, which could be a game changer for its logistics business model, according to Zhou Shengxue, vice-president of Transfar Zhilian.

Established in 1986, Transfar Group is a company with diversified operations covering chemicals, logistics, agriculture, technology and investment, and ranks among the top 500 Chinese enterprises.

The group expanded its business from chemicals to logistics in 2003, when it owned more than 300 trucks, more than enough to meet its needs exclusively.

"Then we made the logistics service independent from the original businesses, so that we can also provide services to other manufacturers," Zhou said. He added that the company has been continuously innovating in the logistics business since that time.

Transfar has set up major logistics e-commerce platforms, which help corporate clients with freight demand to find logistics companies and vice versa.

One of them is called Lujing, which provides cargo shipment between cities. The other is called EHD, providing easily accessible logistics services online for inner-city deliveries.

"Traditional logistics services means truck drivers end up spending a lot of time waiting for customers and vice versa," Zhou said.

Zhou Shengxue, vice-president of Transfar Zhilian. [Photo provided to China Daily]

The new, online approach can greatly improve efficiency, helping truck drivers and customers to find each other quickly.

"With such an approach, you can know where the cargo is from, where it will go and where it is right now, simply by using a smartphone app," Zhou said.

The company's service-sharing platforms also enable truck drivers to ensure they always have a full load by combining different resources. For small business owners, it means lower costs and faster delivery. For retailers, it means quicker response times to orders placed through different channels.

By the end of June this year, the Lujing business had expanded to 279 cities across the country, with 1.33 million registered truck drivers. EHD had become available in the country's 30 major cities, with 74,400 registered truck drivers and more than 1,000 major logistics companies getting involved.

Harnessing new sectors

"At the core of the internet approach is big data analysis, which functions as the brain of the logistics system," Li said.

Big data analysis is valuable in its potential to foresee industrial growth and slowdowns, and can facilitate risk management, he said.

Higher efficiency is just one of the benefits of online approaches to the logistics business.

"A more reliable way of payment is also urgently needed for all parties," Zhou said.

Traditionally, logistics companies often take money from those receiving the cargo, after the delivery is completed.

"A lot of money is kept by the logistics companies, and sometimes the drivers, as the cargo receivers want to make sure the items were not damaged after the long journey," Zhou said.

In some cases, logistics company bosses have even run away with the money that should have been returned to the cargo suppliers, after the failure of their businesses.

To avoid this situation, in August this year, Transfar launched its third-party payment platform Transfar Pay and launched its marketing efforts in Henan province.

As an essential part of the company's internet logistics approach, Transfar Pay connects goods producers, distribution centers and cargo receivers to ensure reliable cash flow.

The wide use of internet technologies has boosted the rapid growth of the delivery industry in Zhejiang province. [Photo provided to China Daily]

The payment goes to Transfar's special bank account, supervised by the country's top financial authorities, according to Zhou.

The payment business has so far been expanded to Anhui, Shaanxi, Shandong, Jilin, Liaoning and Heilongjiang provinces.

Liu Yukun in Beijing contributed to this story.