1.Ocean Express + E-commerce Large Item Door-to-Door Delivery
Recently, Pinduoduo's overseas version, TEMU, tested the ocean express large item door-to-door service. They attempted system integration with several shipping companies to achieve fully visualized management throughout the service. It is still unclear to what extent TEMU's ocean express large item door-to-door service can scale, but such attempts may further improve the cross-border logistics infrastructure for large items door-to-door.
In Western countries, logistics for small e-commerce parcels is relatively mature, with services available from DHL, UPS, USPS, etc. However, door-to-door services for large items like refrigerators, washing machines, and TVs are very expensive in the West because they lack a mature large item e-commerce logistics network like that in China.

In China, companies such as SF Express, Best Express, Zhongtong Express, Deppon Express, and RRS Logistics provide door-to-door delivery services for large items ordered from e-commerce platforms, along with installation, after-sales service, and repair, often with free shipping offered by the platforms.

Currently, the e-commerce large item door-to-door network in Western countries is underdeveloped because overseas e-commerce platforms or sellers are reluctant to invest heavily in marketing and subsidies to build up order volume, which is essential for creating logistic distribution density within a region, and thus forming a nationwide or regional large item express network.

If platforms like TEMU invest heavily in subsidies to increase order volume initially, and once a certain order density is achieved, logistics providers would be willing to invest in building a regional e-commerce large item door-to-door logistics network.

Some shipping companies, ports, and overseas trucking companies are starting to plan, leading to the formation of overseas large item door-to-door express networks and accelerating a new round of improvements in cross-border e-commerce infrastructure. Once this network is established, the commercialization of more large items and the reduction in fulfillment costs for large item logistics will have a positive impact on the industry.

2.Full Freighter Direct Flights, Multi-Port Entry, Regionalized Delivery
In 2023, e-commerce platforms like TEMU and SHEIN drove a surge in demand for air freight, with daily cross-border e-commerce air shipments from China estimated at no less than 10,000 tons. Such a massive volume of parcels requires injection at multiple ports in Western countries and customs clearance.
For example, in the United States, customs clearance previously occurred mainly at Los Angeles and New York. Now, it has expanded to include Dallas, Miami, Chicago, and several other ports, with potential future expansion to even more ports.

As order density increases, more full freighters will be used for multi-port entry, dropping orders closest to consumers for localized customs clearance and delivery, making multi-port clearance and regionalized last-mile delivery a future trend.

E-commerce platforms can accelerate global e-commerce logistics infrastructure by driving traffic and subsidies, leading to improved fulfillment systems worldwide. In the chicken-or-egg scenario, the "chicken" clearly comes first: without e-commerce orders, logistics providers cannot follow with services and infrastructure development.

During peak seasons when overseas postal services face warehouse overloads and delivery delays, logistics companies, supported by sufficient order volumes, can establish regional proprietary courier networks, a task that would be impossible with lower order volumes. In 2023, several logistics companies in Western countries began experimenting with localized regional delivery services, forming regional courier or local express companies. This trend is expected to grow in 2024, presenting new opportunities for Chinese cross-border logistics companies.

The aggregation of e-commerce platform shipments not only drives port development but also fosters many regional delivery companies, indicating a future evolution in cross-border direct parcel services: “Full Freighter Direct Flights + Multi-Port Entry + Regionalized Delivery”.

3.The Era of Cross-Border E-commerce Express Logistics
The trend of “Full Freighter Direct Flights + Multi-Port Entry + Regionalized Delivery” will further usher in the era of cross-border e-commerce express logistics.
In 2023, the era of cross-border e-commerce small packet express began, marked by two significant events.

First, Cainiao proposed a global five-day delivery standard for e-commerce express. Additionally, in August 2023, the leading industry group Zongteng Group's YunExpress launched two B777F all-cargo flights from Shenzhen to Paris, France, operating six flights a week, with dedicated cargo stations at airports in Shenzhen and France, and proprietary collection and delivery services. On this China-France route, they achieved faster delivery times than DHL, UPS, and FedEx, by 1-2 days, at only about 60% of DHL’s prices.

Today, fully managed e-commerce platforms demand higher performance standards from logistics providers, prompting an upgrade from e-commerce small packets to e-commerce express. Cross-border e-commerce express, distinct from commercial express, forms a global e-commerce express network.

Well-known companies like DHL, UPS, and FedEx operate hub-and-spoke networks, with global freight hubs such as FedEx's Memphis, UPS's Louisville, and DHL's Leipzig, from which they radiate services through hub-and-spoke air networks.

Under the past 40 years of a WTO-driven globalized manufacturing landscape, the international express giants have leveraged cargo planes to transport primarily samples and documents, which are highly unpredictable in terms of sender and recipient directions, making it difficult to concentrate orders. They rely on global freight hubs for centralized cargo processing, followed by multi-level distribution and delivery, e.g., using B777 or B747 large intercontinental planes from Asia to core hubs in the West, then smaller aircraft like the B757 or B767 from these hubs to secondary hubs.

In the era of e-commerce logistics, the layout of the global e-commerce logistics network will undergo significant changes. Instead of a hub-and-spoke model, a point-to-point approach will prevail. For instance, all-cargo flights from China to the U.S. or Europe, whether to New York, Los Angeles, Miami, Dallas, Chicago, Frankfurt, Amsterdam, or London, will fly directly to these cities, clear customs, and deliver locally.

Currently, there is a significant imbalance in China's trade with the rest of the world, with planes fully loaded on outbound flights and potentially empty on return. This is a challenge under the backdrop of express cargo globalization, requiring breakthroughs from chartered to scheduled flight rights and exploring global through-flights, necessitating more overseas coordination and capability building.

"Going global" has become the main theme in the field of cross-border e-commerce logistics in 2024. As for logistics moving overseas, the international market is starkly different from the domestic one. What are the current characteristics and developments of the overseas market? And how should companies adjust themselves to integrate into the process of internationalization?

1.Domestic e-commerce has entered a mature market, making overseas logistics expansion inevitable.
By 2024, logistics expansion overseas is not a choice, but a necessity. Major domestic logistics companies like SF Express, STO Express, YTO Express, ZTO Express, JD Logistics, and others are all making efforts to expand overseas, as the domestic e-commerce market has become saturated. These companies handle about 300 million parcels daily, with each company handling 30 to 50 million parcels. ZTO Express handles the most, with daily volumes around 70 to 80 million parcels.
For these network-based courier companies, 30 million daily parcels are the survival threshold. Falling below this threshold could mean network-wide losses. Only when the daily volume exceeds 30 million parcels can the benefits of cost and scale efficiencies be realized, allowing companies to stabilize their profits.

Thus, without any growth in new volumes domestically, these companies must look overseas for new markets.

Apart from domestic courier services looking to expand overseas, companies already engaged in cross-border logistics are also accelerating their international expansion. E-commerce platforms are prompting logistics providers to establish resources at foreign ports, customs clearance facilities, and last-mile delivery resources. Companies that have strategically positioned themselves at key international logistics nodes saw significant growth in 2023.

Two months ago, J&T Express announced that it would focus on establishing a network for the "last mile" delivery overseas, reducing investments in other areas. This is a wise move as the last mile is a critical and challenging aspect of logistics, crucial for ensuring timely deliveries.

2.The core of logistics companies going global
The core for logistics companies going global starts with globalizing their customer base. If a logistics company expands internationally but only serves Chinese sellers, that would be too limiting. Only by serving a global clientele, including local customers in overseas markets, can a company develop greater resilience.
Next is the internationalization of the team, which is a significant challenge. This involves internal development within the company and transforming existing personnel to build a team with a global perspective, which is foundational for growth.

Thirdly, embracing cultural diversity is crucial. Operating locally in foreign markets means complying with local cultures, laws, labor rights, etc. How well a company integrates and embraces multiculturalism and adapts to foreign consumer habits is vital.

3.Chinese companies going overseas and foreign companies entering China
Currently, many companies have expanded internationally, obtaining customs licenses, establishing bonded and overseas warehouses, purchasing trucks, and conducting "last mile" deliveries in specific regions. This expansion impacts local logistics companies overseas.
As more Chinese logistics companies go global, local logistics firms overseas feel an increasing sense of crisis. They are keen not to be relegated to serving only top-tier companies and platforms, where they face immense price pressure. Post-pandemic, more local logistics companies are eager to enter China to explore new markets and find new clients.

Many overseas postal services, customs agencies, warehousing, and trucking companies are rushing to enter the Chinese market to collaborate with mid-tier enterprises, independent sellers, and brands looking to expand overseas, aiming to diversify their customer base beyond just major logistics companies and platforms.

4.Risk control and compliance awareness
The expansion of Chinese companies overseas has enhanced efficiency across the global industry. In 2023, many leading cross-border logistics companies saw revenue and profit growth, while industry differentiation intensified.
We've also seen some smaller enterprises facing operational pressures. Often, these issues arise not from business operations per se but from non-compliance, such as under-declaring duties, leading to seizures at foreign customs. The essence of these sudden collapses is often a lack of risk management and compliance awareness.

Post-pandemic, when the industry saw a decrease in profit margins, smaller companies with weak foundations and inadequate risk control faced significant challenges. The industry's foundational chaos led to increased trust costs between sellers and logistics providers, concentrating orders and volumes towards larger enterprises, further highlighting industry stratification.