Summary of Key Points
In the first half of this year, the express delivery industry has moved away from the vicious price wars of the past (“anti-internal competition”), with leading companies such as Zhongtong, YTO, and Jituk experiencing significant increases in net profit. The growth can be attributed to three main factors: firstly, regulatory guidance has led to a reduction in competitive intensity, shifting the focus from “scale” to “value”; secondly, the use of technology such as AI and unmanned devices has helped reduce costs and increase efficiency; and thirdly, international business (in regions like Southeast Asia, Latin America, and the Middle East) has become new growth areas. Experts believe this represents a “repair of operational quality,” with future prospects lying in overseas expansion and automation. However, the industry also faces challenges such as rising compliance costs and adjustments to the profit distribution within the franchise system.
Detailed Analysis
1. The Key to Surging Profits: The End of Excessive Competition
In the past, express delivery companies would cut prices to attract customers, sometimes even incurring losses just to gain market share, resulting in extremely thin margins. Now, with regulatory intervention promoting “anti-internal competition,” local measures require companies to focus on service quality rather than low prices. For example, Lai Meisong, the founder of Zhongtong, stated that the industry’s emphasis has shifted from merely increasing包裹 volume to balancing both volume and quality. Jituk has also mentioned that anti-competition efforts have made competition more rational. As a result, Jituk’s net profit increased by 124% in the first half of the year, YTO’s by 73%, and Zhongtong’s by 56%—no longer do they need to sacrifice profits for market share.
2. Innovative Cost Reduction Strategies: AI and Unmanned Technology Save Money
In addition to reducing competitive pressure, companies are leveraging technology to cut costs. Jituk has invested in over 1,900 new unmanned delivery vehicles (an 87% increase from the end of last year) and uses AI to optimize routes and sorting processes. YTO has adopted automated sorting equipment, which has reduced the cost per package by nearly 6%. Zhongtong’s digital management systems have saved 2 cents per delivery. These efforts have lowered costs, leading to higher gross margins—YTO’s gross margin per package increased by 57%, demonstrating the effectiveness of these strategies.
3. New Growth Drivers: International Business Booms
With the domestic market stabilizing, companies are turning their attention to overseas markets. Jituk’s volume of deliveries to Southeast Asia has grown by 71%, and its business in Latin America and the Middle East by 119%, thanks to partnerships with e-commerce platforms like TikTok, SHEIN, and Temu. YTO’s international network covers more than 150 countries, while Zhongtong is seeing an increase in high-value customer segments (such as platform return shipments). The rapid growth of overseas e-commerce has provided new sources of profit for the industry.
4. Experts’ Perspectives: A Period of Recovery with Both Opportunities and Challenges
Express delivery expert Zhao Xiaomin believes that the profit growth is not due to increased volumes (the growth rate in business volume is low) but rather an improvement in internal management and competitive environment, representing a “repair of operational quality.” The second half of the year is expected to be more profitable due to peak shopping seasons and overseas inventory buildup. However, there are challenges: whether the anti-competition measures are sufficient; compliance requirements (such as eco-friendly packaging) may increase costs; and adjustments to the profit distribution among franchisees (headquarters, outlets, and delivery personnel) are necessary to ensure sustainability.
5. Future Directions: Overseas Expansion and Automation
Zhao Xiaomin highlights that the industry’s future focus should be on overseas expansion (e.g., Jituk’s presence in Latin America and the Middle East, and YTO’s global network), as well as automation (unmanned vehicles and sorting equipment). These initiatives can help companies continuously reduce costs and capture additional market share. Nevertheless, issues such as rising compliance costs and profit distribution adjustments need to be addressed to maintain healthy growth.
Overall, the express delivery industry is moving from a focus on low prices to profitability. To sustain growth, it must resolve internal challenges related to profit distribution and compliance. For consumers, this may mean improved service quality (with fewer package losses), but delivery fees are unlikely to remain as low as they were in the past.