Chinese express parcels market powers ahead as Korea Post refocuses on e-commerce
The Chinese express parcels market will keep growing at high double-digit rates, with international business playing a bigger role in future, according to a leading researcher, while Korea Post is targeting e-commerce as it transforms its business model in response to the fourth Industrial Revolution, its CEO says.
The number of parcels in China has rocketed by 35% a year on average in recent years, surging from 43 billion pieces in 2017 to an expected 54 billion this year, Zeng Junshan, director general of the Chinese State Post Bureau’s research centre, told the POST-EXPO 2018 conference in Hamburg yesterday.
“We expect the market will grow over 20% a year in future,” commented Zeng, speaking through an interpreter. The volumes could reach 80 billion items by 2020, according to SPB forecasts.
At the same time, the average price of an express shipment in China has gradually fallen from RMB 25.8 per item in 2009 to RMB 12.4 per piece in 2017 thanks to network expansion and technological improvements.
With this efficiency improvement, “the CEP industry has further driven down logistics costs of society and saved more than RMB 100 billion logistics costs for the whole society over the past decade,” he pointed out. In addition, the sector is helping economic development in rural areas, for example helping farmers out of poverty by delivering fresh products rapidly to cities and enabling farmers to sell directly at higher prices than through intermediaries.
Meanwhile, international business is getting more and more important for Chinese delivery companies, with volumes rising by 30% to 1.73 billion items in 2017. “International is a new growth highlight,” Zeng said.
In response, major Chinese express players have established networks in South-East Asia, Europe and North America, and are offering e-retailers a wider range of services, including cross-border transportation, customs clearance, warehousing and supply chain management, he noted.
In neighbouring South Korea, the state-owned national postal operator is steadily increasing its turnover as parcels make up for letter mail decline, Korea Post president Seong Ju Kang told the conference. Domestic parcel volumes are growing by about 8% a year, and reached 245 million in 2017, while EMS shipments totalled 7 million last year. Letter mail volumes have dropped by a third over the last 15 years.
However, Korea Post’s already low share of the domestic parcels market has worsened as it lags behind overall market growth. Its market share fell from just over 10% in 2010 to 8% in 2016.
The postal operator now aims to catch up and profit from the e-commerce revolution by launching new products and services, developing cross-border products such as the K-Packet, and teaming up with other international postal operators and e-retailers to open up ‘global shopping markets’. In addition, it has launched a local ‘Korea Post Shopping’ webshop with the aim of generating 1 trillion won in turnover and 1 million customers.
“Korea Post wants to change its business model towards e-commerce,” Kang declared.
Presenting some of Korea Post’s diverse initiatives to respond to the so-called ‘fourth Industrial Revolution’, the CEO also highlighted tests of drone deliveries in three different areas over the last year and plans to deploy 10,000 electric delivery vehicles in the next few years in place of motorcycles.