China's State Post Bureau has announced that the country last year overtook the U.S. to take the world's top spot in terms of express delivery volumes. According to a statement, the total
express delivery volume reached 13.96 billion items in 2014, which was a 51.9% on the previous year.
The peak month for China’s express delivery businesses was November, when 1.65 billion parcels were delivered.
China’s booming e-commerce industry is seen as the key driver for the surge in express deliveries and the Chinese authorities aim to develop more e-commerce opportunities in rural communities to accelerate growth in the express delivery market.
In terms of revenue, however, China still significantly lags behind the U.S. express market.
Fragmented express market
According to the State Post Bureau, China’s express delivery companies collectively achieved a total revenue of 204.54 billion yuan (US$32.95 billion) in 2014, which was up by more 40% on the previous year, but which is still less than 80% of that of UPS' revenue alone.
Compared with the leading international express delivery firms, FedEx, UPS, DHL and TNT, China's express market is fragmented and at the moment there is not a single Chinese firm which can deliver express products globally on the same scale as their western peers.
Alibaba is eager to globalize
Alibaba, China's leading e-Commerce giant, which recently acquired a 10% stake in China's domestic express provider, YTO Express, has indicated it wants to become a global express delivery player.
YTO’s chairman, Yu Wiejiao, has acknowledged that Chinese delivery services are still lagging behind the global delivery firms in terms of the management team, networks and information systems, but he has said that "Alibaba can help bridge the gap.”
As Alibaba's international activities represented just 9% of total revenue for the first quarter 2015, Alibaba’s CEO, Daniel Zhang is convinced the company will have to globalise.
Additional services offered by Alibaba
One of the recent initiatives to achieve that position is the launch of its Alibaba Merchant Delivery service in Southeast Asia, which is aimed at providing sellers with a tool to easily deliver goods to customers overseas.
Singapore Post, in which Alibaba has taken a 10.35% shareholding, is its first logistics partner in the Merchant Delivery service and members in Singapore, Thailand and Malaysia will be able to utilise Singapore Post’s e-commerce, postal and logistics solutions at preferential rates.
In a separate development, the Alibaba Group has acquired a 30% stake in China Business Network (CBN), which will see the e-commerce giant extending its reach into financial services. CBN is part of Shanghai Media Group (SMG) and has a range of businesses, such as TV, radio, newspapers, magazines and websites, and it has been exploring financial information services.
Nol van Fenema