"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.