Express delivery helps flow of goods rebound

Express delivery businesses in Wuhan, the capital of Hubei province and the city once hit hardest in China by COVID-19, reached the target of restoring 90 percent of production in mid-April. The city has 4,468 express delivery outlets, and 4,288 of them had reopened by the end of last month, accounting for 95.97 percent of the total, the local government reported in late April.

The extended Lunar New Year holiday and the self-quarantine during the coronavirus outbreak's peak in China highlighted the express delivery industry's significance in distributing daily living and medical materials, as well as goods such as food, laundry detergent and facemasks, to Chinese families across the country, said Yu Weijiao, chairman of Shanghai-based YTO Express.

"The epidemic will change many Chinese consumers' shopping behavior in the long run," he said, emphasizing that China's battle against the virus has accelerated the shift toward online commercial channels and new retail based on on-demand delivery.

In addition to investing 1 billion yuan ($141 million) to build an industrial zone to develop the next generation of logistic tools and solutions, as well as other commercial projects in Shanghai this year, YTO Express has not only deployed resources to help Chinese companies resume production, but has also sent cargo planes to ship epidemic prevention and control materials and goods to countries including Malaysia, the Philippines and Pakistan.

The express sector will shift from a labor-intensive sector to a capitaland technology-intensive one, said Cai Jin, vice-president of the Beijing-based China Federation of Logistics and Purchasing. This is in line with the government's desire to support the development by express delivery and technology companies of smart postal lockers, drones, driverless vehicles and fully automated warehouses to boost the express industry's work efficiency and upgrade its digital technologies, he said.

"Key players have already begun to cut operational costs and improve efficiency via adding investment in the areas including service robots, 5G application, drones, big data, electric trucks, new cargo aircraft and internet-connected warehouse facilities," Cai said.

China's express delivery market has been the world's largest by volume since 2014 and is likely to become the largest by revenue in 2020, global credit ratings agency Fitch Ratings predicted in a report in March. This will be underpinned by the country's shift to a consumption-driven economy, continuing urbanization, rising e-tailing penetration into inland and lower-tier regions and the rise of new retail models and social e-tailing, it said.

Apart from dealing with the coronavirus outbreak, the agency affirmed that industry concentration will keep rising as larger companies that have a competitive edge gain market share as well as through mergers and acquisitions, strategic alliances and the exit of smaller participants throughout China.

Since express delivery is an essential industry for the national economy, its strategic value, driven by strong market demand, will not face a substantial impact this year, said Lai Meisong, chairman of Shanghai-based ZTO Express.

China's courier sector saw rapid growth during the recent five-day May Day holiday, with parcels collected and delivered both surpassing 1 billion pieces, according to data from the State Post Bureau.

In all, 1.1 billion parcels were collected during the period, up 41.8 percent year-on-year, while 1.04 billion parcels were delivered, up 38.93 percent from a year earlier.

The bureau said China's express delivery business rebounded from a low level in January, with positive growth in February. Growth remains at over 30 percent on a yearly basis, it said.