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Overseas layout of China's logistics giants

Release Time:2022-10-28 06:01:14 View:1744

Forwarded from Jiuzhou Logistics Network 2022-10-24

01 Why Domestic Logistics Enterprises Accelerate Sailing

1. Seek the second growth curve

When the domestic market share of the brand is basically stable, if you want to seek further development, you must go to sea. And with the deepening of the national complex of Chinese consumers, the need to build a Chinese international brand is more urgent. In addition, at present, China's domestic express logistics market is "the world has divided", and the internal volume in the form of price war is very serious. Therefore, domestic logistics giants have set their sights on overseas to smoothly cross the second growth curve. The strong demand of business flow and logistics for new growth points further drives the internationalization of logistics.

2. Accelerated development of cross-border e-commerce

According to the report "Digital Platform Helps SMEs to Participate in Global Supply Chain Competition" released at the end of March this year, building a digital international supply chain will be a strategic node for building a "domestic and international double cycle". This means that cross-border trade will also move towards a more convenient direction. In addition to the extensive application of cloud computing, big data, artificial intelligence and other digital technologies in recent years, the industry efficiency of cross-border e-commerce has been greatly improved, ushering in new development opportunities. The epidemic has accelerated the digitalization of shopping for overseas consumers, bringing new opportunities for cross-border logistics.

3. National policies

The bilateral trade volume between China and countries along the "the Belt and Road" has continued to rise, which has brought broad development space for cross-border logistics. The Regional Comprehensive Economic Partnership Agreement (RCEP) signed by China and other countries in the world officially came into force on January 1, 2022. It promotes cross-border trade through tariff reduction, trade facilitation and standardization, regional coordination and integration and other institutional arrangements, and also helps to improve the efficiency of cross-border logistics.

02 Take Newbie as an example to see the successful experience of domestic logistics giants going to sea

1. Novice's "Global Flying"

At present, Cainiao has built 7 super large core logistics hubs in the world, including 2 million square meters of bonded warehouses and overseas warehouses. Its business covers 174 countries and regions on 6 continents, 921 cities/ports. It is China's largest comprehensive cross-border logistics service provider, one of the four new cross-border parcel networks in the world, and the same echelon with the world's three major express delivery giants FedEx, DHL, and UPS.

2. See the way of rookies flying high

Newbies are following the path of opening up the market with open cooperation and building a market with full links.

For example, in 2015, rookies entered the UK market. According to the popular categories and package characteristics of AliExpress in the UK market, they teamed up with Royal Mail and Sinotrans to build their own networks relying on e-commerce platforms. At the same time, Cainiao strives to build a full link logistics platform to help businesses serve consumers more directly. In 2019, Newbie's global supply chain helped sellers save 20% of the overall supply chain cost by improving efficiency and reducing inventory. At present, more than 29000 overseas brands from 87 countries and regions have entered the global supply chain network of rookie, realizing the 5-day arrival of the world's top 20 cities.

In view of the long chain and low degree of digitalization of the express logistics market, Cainiao has built its own global intelligent logistics backbone network, including all links of the whole chain, such as merchant collection, goods distribution, international trunk lines, logistics hubs and destination delivery. It has invested heavily in building eHubs around the world to achieve end-to-end logistics capabilities, and has gradually evolved to deepen daily operations and business expansion through investment in technological innovation and intelligent transformation.

03 The hottest blue ocean of express logistics - Southeast Asia

1. Why express companies compete to enter Southeast Asia

1) Advantages of emerging markets

Since ancient times, Southeast Asia has been China's only way to the world, and it is one of the most dynamic and potential regions in today's world economic development. The total population of the countries here ranks the third in the world. The labor resources are rich and cheap, the population structure is young, and there is broad consumption potential. The epidemic has also accelerated the online consumption boom in Southeast Asia, and there is a huge demand for consumer goods made in China. Moreover, due to backward infrastructure and other reasons, the logistics market has not been fully developed.

2) Impact of the political environment

At present, the United States is the largest market for China's cross-border export e-commerce, so the logistics market has also been basically mature. Large markets such as Japan, South Korea, Australia, the Middle East and India are also occupied by old international express giants such as DHL, UPS, which is easy to defend and difficult to attack. In addition, influenced by the international situation, there is still great uncertainty in the future cross-border trade between China and the United States and other countries. In contrast, Southeast Asia plays an important role in China's "the Belt and Road" initiative and is the main region for China to cooperate with countries along the Belt and Road.

3) Huge development potential of e-commerce

Due to the development of China ASEAN community of shared future, the cross-border trade volume in the Asia Pacific region accounts for about 53% of the global market size and continues to rise. In the context of RCEP and the "the Belt and Road Initiative", the growth space of cross-border e-commerce in Southeast Asia has further widened. From 2016 to 2020, the e-commerce market in Southeast Asia expanded by nearly 600%. The 2021 Southeast Asia Digital Economy Report jointly released by Temasek, Google and Bain predicts that the total sales of e-commerce in East and South Asia will reach $89.67 billion in 2022, an increase of 20.6% year on year.

4) Development of Internet and other technologies

In recent years, the education level and Internet level in Southeast Asia have been continuously improved, and the traffic dividend has not yet been harvested, making it the first choice for many overseas enterprises to seek gold. In addition to finance and the Internet, the development of all walks of life is closely related to the logistics industry, so logistics enterprises have also begun to pour into the Southeast Asian market.

2. "Thousands of layers" in Southeast Asian market

1) Stand on the shoulder of the local e-commerce platform and open the way for the self operated logistics center

Lazada is the largest e-commerce company in Southeast Asia in 2018. The company was acquired by Alibaba in 2016, and now it has become Alibaba's flagship e-commerce platform in Southeast Asia. This platform is the basis of consumer demand for newcomers. In 2017, Cainiao carried out the construction of a super logistics hub eHub in Kuala Lumpur, Malaysia, which was operated by Cainiao itself. It made full use of Malaysia's trade hub position in Southeast Asia to establish a logistics network with seamless links.

In 2017, JD reached cooperation with Tokopedia, an Indonesian e-commerce company; In 2018, strategic investment was made in Vietnam's e-commerce platform Tiki. In the same year, JD's intelligent logistics center in Thailand has also been fully implemented.

2) Cooperate with local logistics enterprises to quickly integrate lightweight investment

In 2018, JD Logistics' intelligent performance platform teamed up with DHL, Kerry Logistics and Nippon Post Logistics to gradually extend its 211 time limited service in Bangkok to Thailand, establish its own overseas warehouses in Thailand, Indonesia, Vietnam, etc., and cooperate with local logistics to provide terminal distribution.

In 2019, Shunfeng Holding strategically invested in KOSPA Limited, a Myanmar logistics company, and established new joint ventures with local groups such as Triputra Group in Indonesia to jointly promote the development of Indonesia's online e-commerce and express logistics markets. In September 2021, Shunfeng's high-profile official announced that it had successfully acquired 51.5% of the share capital of Kerry Logistics, a Southeast Asian logistics service provider, and included Kerry Express, the largest Thai express company under Kerry Logistics.

3) Self operated trunk line transportation and terminal dispatch

In 2015, Baishi launched the "self built express distribution+terminal network alliance" model suitable for the local situation in Southeast Asia, widely attracted local self-employed entrepreneurs, rapidly extended the reach of logistics network, and paid more attention to the laying of local express networks in Southeast Asia, so that more Southeast Asian consumers can experience the "speed of China" of express services.

3. Enter Southeast Asia to "Pass Five Passes and Kill Six Generals"

1) Complex geographical environment

Southeast Asia has many sea areas, and the complex geographical environment of various countries has increased the difficulty of distribution. In addition, the customs clearance management process in Shanghai is not unified, and the distribution time has a large gap compared with China's next day arrival, the current day arrival, etc. For example, the distribution of consumers in Indonesia, the "country of thousands of islands", is extremely dispersed, and the delivery of an item often needs to go through multiple islands. Southeast Asia is located in a typhoon and earthquake prone area with complex terrain, which is vulnerable to natural disasters. It is difficult to guarantee the timeliness, high transportation costs and high investment costs.

2) Backward infrastructure

The logistics system in Southeast Asia only covers most of the first and second tier cities. The infrastructure development is uneven, the service capacity is uneven, and the overall logistics level is low. At the same time, the informatization level of the local logistics industry is generally low, the correlation between the logistics terminal agreement and the characteristics of goods (weight, package size, distance, etc.) is low, the overall transportation efficiency and service quality are poor, and the after-sales service quality such as return and replacement is difficult to improve.

3) Cultural challenges

Southeast Asia is a consortium of more than ten countries, each of which has a unique law and culture. However, most of the dispatchers are local people, and the service quality of the last kilometer of logistics is difficult to guarantee. How to manage these employees in a cross-cultural context is a problem that every overseas express company needs to think about.

4) Fierce competition

DHL, UPS and FedEx, the international express giants, have carried out business in Southeast Asia earlier than China, while local logistics enterprises in Southeast Asia, such as JNE, Ninja Van and Jitu, have the advantage of favorable conditions and favorable conditions, and their competitiveness cannot be underestimated. When domestic enterprises go to sea, they will face the challenge of competing with these international express logistics giants and local enterprises.

04 Reflections on Logistics Industry Going to Sea

1. Jump out of logistics thinking and become a demand oriented integrated service provider integrating scientific and technological logistics

Now more and more enterprises are pursuing "cross-border and out of circle", which is because every enterprise wants to actively expand its extension in order to achieve healthy and long-term development. In the face of numerous crises in the global supply chain, the future development of logistics enterprises should also aim to master the full supply chain solutions and avoid being "stuck". There is no need to "define" and "set limits" for themselves.

For example, rookies have been questioned as "a technology company or a logistics company" because of their business model. Because Cainiao mainly operated in the mode of light assets in the early stage, unlike traditional express companies such as Santong and Yida, it mainly provided logistics data for other express companies to allocate transport capacity resources by virtue of its technical information capabilities. However, for the need of rapid expansion, Cainiao later developed such heavy asset models based on logistics infrastructure as "Cainiao Post Station" and "Cainiao Logistics Park". Novice realized that logistics infrastructure+data analysis ability is the king of development.

Whether to be light or heavy, whether to be a platform or self operated, whether to be a technology or a logistics company, logistics companies may wish to take the needs of consumers as the direction of future development, and develop whatever they need, instead of being complacent.

2. Success at sea does not depend on "burning money". Building a suitable logistics system is Yangguan Avenue

Polar Rabbit Express from Southeast Asia officially entered the Chinese market in March 2020, and set off a bloody "price war". With the support of capital, Jitu tried to squeeze into the world of "three supplies and one arrival" with ultra-low prices by "burning money", and traded losses for scale. When the market share was stable, it would raise the price to return blood, but it was boycotted and blocked by domestic express companies. The ability of "hardware" is not enough. It is obviously unsustainable to enter foreign markets only in this way.

This also sounded the alarm bell for Chinese logistics enterprises to go to sea. We can't just squeeze into the market by keeping prices down. The most fundamental thing is to build our own logistics system. Cross border logistics needs to go through domestic collection, sorting transportation, customs clearance, sea, land and air transportation (air trunk line), overseas customs clearance, overseas warehousing and sorting to terminal distribution. With such a long chain, each link is a test. The epidemic situation and the great changes in the international political and economic situation should also make logistics enterprises realize the need to reduce middlemen and reach consumers as much as possible, so as to set about building a suitable supply chain system independently.

3. Use the blockchain to create transparent logistics, optimize end distribution and improve consumer experience

Whether from the perspective of e-commerce platforms, insurance companies or consumers, one of the major pain points of cross-border logistics is "low transparency". The e-commerce platform wants to know whether the freight rate is stable, whether the timeliness of logistics can be guaranteed, and whether consumers want to know whether the goods they buy are legal and whether their privacy can be protected.

Many business scenarios involved in the express logistics industry are very suitable for blockchain technology to play its role. Blockchain technology has the characteristics of decentralization and irreversibility, which allows each participant to access all data transparently, quickly and easily, improve the processing speed of settlement business and distribution efficiency, effectively avoid missing items, solve the problem of tracing and anti-counterfeiting items, fully ensure information security and the privacy of the sender and recipient, and also connect the shipper, the shipper, the distributor Data barriers between different departments and other parties to achieve data resource sharing and improve operational efficiency.

4. Be brave to assume new responsibilities in the post epidemic era and prepare for international emergency logistics

The COVID-19 has hit the entire logistics industry hard. The delivery of major logistics giants has been delayed to varying degrees, the on-time delivery rate has dropped significantly, and the number of shipments has also been repeatedly restricted. At the critical juncture, Chinese logistics enterprises started emergency logistics to send anti epidemic drugs and anti epidemic substances to all parts of the world through their respective logistics systems.

Today, with ESG as a major enterprise evaluation indicator, logistics enterprises should also start to invest and build international emergency logistics as an important social responsibility to help build a national emergency logistics system. Taking the epidemic situation as an example, enterprises need not only to build intelligent logistics facilities represented by unmanned distribution vehicles, digital relay stations and automatic sorting, but also to have a complete supply chain to support the transportation of pharmaceutical products that need low temperature preservation and rapid transportation to the world. Considering the current natural and political environment of the earth, international emergency logistics will play an important role in the future, and it will not be limited to the epidemic situation. How to prepare for the next challenge is a question that every enterprise that wants to make great achievements in the international arena and assume responsibility should think about.

05 China's logistics enterprises go to sea - sometimes after a long time

To sum up, with the rapid development of international trade and e-commerce today, domestic logistics giants have become an irresistible trend of the times. But going to sea is not to copy China's model, technology and experience to other countries. On the one hand, we need to further improve infrastructure, technology application and other hardware to build a complete and effective global logistics network; On the other hand, we also need to deepen our understanding of the characteristics of the times and consumer demand, upgrade our positioning and outlook for the logistics industry, optimize the way to enter foreign markets, and truly adapt measures to local conditions and suit the remedy to the case.

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