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China’s express service getting credit for cheap but fast delivery

logistics companies in china, delivery in china

He Pengyuan, manager of a Beijing depot for courier group ZTO Express, strolls around his warehouse at 7.30am, checking packages, looking at his watch and absent mindedly introducing each of his about 30 couriers by referring to their home regions. "Hebei", "Guizhou", "Guizhou", "Sichuan", he says, going down the line. 


Mr He hails from China's southern region of Guizhou, with the lowest per capita income in the country, and says he would not be in business without fellow migrants. "China's rural labour force is a huge army that keeps advancing. They come to the cities and keep the cost of labour relatively low," he says.


Despite recent slowing growth in the economy China's ecommerce boom has spawned thousands of courier firms.


Mr He estimates that 70 per cent of the parcels the company delivers are packages ordered mainly via Taobao and Tmall, two websites owned by China's ecommerce juggernaut Alibaba. Alibaba and other ecommerce companies like JD.com have made billions from listings on Wall Street. But much of the value comes from the work of the couriers, whose cheap labour fuels these business models in China.


"Low logistics prices were not just vital for the early development of ecommerce, they were a matter of life and death," says Zhang Yi, head of Imedia, a Guangzhou-based consultancy.


Mr Zhang makes the analogy to Foxconn factory workers who build Apple's iPhones. "China's logistics companies are not just cheap. They are also efficient and fast," he says.


Ecommerce relies on these super-cheap delivery services. Delivering a package overnight in most locations costs Rmb10-13, about a tenth of the cost in the US, thanks to the 12-hour days worked by Mr He's couriers. The main beneficiaries are the rising middle class, which consumes the trappings of a much richer society at a fraction of the cost.



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