Logistics Sector Delivers Another Strong Year

China’s logistics industry is continuing its impressive years-long streak of growth, with revenue in the sector rising 24.5% to 495 billion yuan ($77.6 billion) in 2017.

That is more than double the already strong growth of 205 billion yuan in 2014.

The figure is part of the 976.5 billion yuan in revenue last year in the country’s overall postal industry, which includes public postal services and privately owned logistics delivery businesses, said Ma Shengjun, head of China’s State Post Bureau.

In 2017, the country delivered 40 billion packages domestically, up from 5.7 billion five years ago, Ma said, adding that 2017 was the fourth consecutive year that China delivered the most packages of any market in the world.

China’s postal network, comprising public and private delivery services, now covers 87% of the country, Ma added.

Industry expert Shao Zhonglin said, “Rapid investment among enterprises and changing consumer habits have boosted demand for the industry, which also benefits from strong government support.”

The thriving is also fueled by the boom in China’s e-commerce business. Couriers such as SF Express Co. Ltd. and Shanghai YTO Express Logistics Co. Ltd. offer parcel-delivery services for e-commerce companies like Alibaba Group Holding Ltd. and JD.com Inc.

Fierce competition has riled the industry recently, as companies race to adopt new measures to expand market shares, including using new technologies and increasing delivery capacities.

SF Express, which began testing a drone-delivery service in southeastern China in July, said it hopes to begin commercial use of large drones by 2019, and is exploring other uses for them, such as in emergency logistics.

But these couriers are expected to face challenges as e-commerce companies develop their own delivery platforms. Last month, JD Logistics — JD.com’s in-house delivery platform — said it had reaped 30 billion yuan in annualized revenue in 2017.

Analyst Shao predicted that growth in the logistics industry will slow in coming years as China’s domestic market matures. He said that couriers will instead seize opportunities to expand into oversea markets.

Contact reporter Mo Yelin (yelinmo@caixin.com)