Lo­gis­tics sec­tor could be­come new growth driver

Global Times - - Biz Comment - By Li Qiaoyi The au­thor is a re­porter with the Global Times. bi­zopin­ion@ glob­al­times. com. cn

In the din­ing and taxi in­dus­tries, the rip­ple ef­fect of China’s shar­ing econ­omy boom has been felt for quite some time, with food de­liv­ery and ride- hail­ing ser­vices now all the rage. But the coun­try’s lo­gis­tics mar­ket, the world’s largest, has not yet felt the ben­e­fit of the shar­ing econ­omy.

There are, how­ever, grow­ing signs that the lo­gis­tics sec­tor is chang­ing and get­ting stronger, in the in­tracity courier seg­ment in par­tic­u­lar.

In a fresh sign, 58 Suyun – the freight busi­ness unit of 58 Home, China’s largest on­line bazaar serv­ing lo­cal mer­chants and con­sumers – an­nounced on Mon­day in Bei­jing that it had en­tered into a merger with GOGOVAN, a van- hail­ing plat­form used widely in South­east Asia. 58 Suyun cov­ers more than 100 cities across the coun­try and over 1 mil­lion driv­ers have signed up with the plat­form, while GOGOVAN en­com­passes six coun­tries and re­gions in­clud­ing Hong Kong, Ma­cao, Sin­ga­pore and In­dia, and has more than 180,000 driv­ers signed up, ac­cord­ing to the com­pa­nies.

The merger, which will cre­ate Asia’s largest in­tracity lo­gis­tics and freight on­line plat­form, in­di­cates an ex­ten­sion of the in­tracity courier boom that is gain­ing steam in China’s do­mes­tic mar­ket.

It’s be­com­ing in­creas­ingly ob­vi­ous that shared lo­gis­tics ser­vices, a com­par­a­tively weak link in the coun­try’s shar­ing econ­omy boom, are start­ing to de­velop. Other than the con­ve­nient avail­abil­ity of In­ter­net- based in­tracity freight ship­ping ser­vices such as 58 Suyun and Lanx­iniu, a num­ber of same- city ex­press par­cel de­liv­ery star­tups in­clud­ing Shan­song Ex­press and Dada have emerged in the mar­ket. The two courier plat­forms – both of which prom­ise one- hour de­liv­ery ser­vices for or­ders within five kilo­me­ters – have gath­ered a grow­ing num­ber of pri­vate­hire couri­ers.

Such ser­vices broaden the net­work of es­tab­lished courier firms that rely on their own ve­hi­cles and couri­ers to reach out to con­sumers. As a con­se­quence, courier ser­vices have be­come ubiq­ui­tous in the cities where these shared plat­forms are up and run­ning. It means that shared lo­gis­tics ser­vices are in­creas­ingly sought af­ter, not just by mer­chants and cus­tomers seek­ing read­ily avail­able fast de­liv­ery ser­vices, but also by in­vestors, who are bullish about the out­look for the coun­try’s in­tracity courier mar­ket. Of­fi­cial data shows that the coun­try’s in­tracity ex­press de­liv­ery vol­ume

hit 1.36 bil­lion items in the first three quar­ters of 2016.

The rise of shared lo­gis­tics and freight ser­vices will surely add to the strength of the coun­try’s lo­gis­tics mar­ket.

Steven Lam, co- founder and CEO of GOGOVAN, said at the event an­nounc­ing the merger that over­seas mar­kets have been much slower than China in terms of build­ing lo­gis­tics net­works.

In an in­di­ca­tion of the lack of mo­men­tum in the US mar­ket for on- de­mand pick­ups and deliveries, ride- shar­ing gi­ant Uber an­nounced ear­lier this year it would scale back its lesser- known courier off­shoot UberRush. It is note­wor­thy that there’s less hin­drance for the de­vel­op­ment of shared lo­gis­tics ser­vices in China when com­pared with ride- hail­ing ser­vices, which have found them­selves in con­flict with es­tab­lished taxi com­pa­nies. Protests from taxi driv­ers and firms prompted the gov­ern­ment to un­veil rules to reg­u­late rideshar­ing ser­vices, and as a re­sult in cities such as Bei­jing and Shang­hai, pri­vate­hire car driv­ers need a lo­cal hukou and car li­cense to be qual­i­fied for the job. While there cer­tainly need to be rules to over­see In­ter­net- based lo­gis­tics and freight ser­vices, the lack of com­pet­ing vested in­ter­ests should make de­vel­op­ment of shared lo­gis­tics ser­vices eas­ier. Of course, to en­sure safe and re­li­able lo­gis­tics ser­vices, it is im­por­tant for the var­i­ous plat­forms to in­vest suf­fi­ciently in courier in­sur­ance. With the mar­ket set to see ac­cel­er­ated growth in the years to come, it is also ad­vis­able that the use of vans and trucks should be scru­ti­nized, with in­dus­try heavy­weights in par­tic­u­lar able to take ad­van­tage of big data and to co­op­er­ate with rel­e­vant gov­ern­ment bod­ies to put an in­tel­li­gent trans­port mon­i­tor­ing net­work in place so as to avoid shared lo­gis­tics ser­vices adding to traf­fic woes. It is ex­pected that these ef­forts could build the coun­try’s lo­gis­tics sec­tor into a new growth driver for the econ­omy.

Illustration: Luo Xuan/ GT

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