When Xing Zuzhong, a medical worker in Hunan Province, central China, went to neighboring Hubei to help control the novel coronavirus epidemic in early 2020, he had no idea that he would become a statistical milestone. On December 22, 2020, after the situation was well under control, Xing received an unexpected gift from his co-workers in Hubei. The package also happened to be the 80 billionth package delivered by the country's courier sector in 2020, according to data from the State Post Bureau (SPB).

While medical workers were busy combating the virus, delivery workers were also contributing to the battle, taking medical and daily supplies to the people staying indoors. The SPB estimated that the annual revenue of the courier sector was expected to cross 869 billion yuan ($133 billion) by the end of 2020.

The growth has been strongly backed by booming online consumption and the release of pent-up demand under coronavirus containment measures. According to National Bureau of Statistics data, online retail sales rose 11.5 percent year on year to over 10 trillion yuan ($1.5 trillion) in January-November of 2020.

Over the past five years, the sector has become increasingly smart and efficient, using robots for sorting packages and drones and bullet trains for their delivery. Courier companies have seen remarkable growth. Seven of them got listed in 2019.

"Shored up by e-commerce platforms, the courier sector has weathered challenges during the epidemic and also provided jobs," Pan Helin, Executive Director of the Digital Economy Academy of the Zhongnan University of Economics and Law, told Beijing Review.

However, Pan said that although the epidemic situation has eased domestically, the sector still needs to improve its digital transformation as online consumption will continue to surge.

November upsurge

Over the past months, the sector has sustained steady expansion. Since the number of parcels delivered hit 50 billion in early September, the industry has seen monthly growth of about 10 billion, showing the spending power of consumers had resumed amid economic recovery.

November especially saw an upsurge, partly thanks to the Double 11 online shopping festival. According to the SPB, postal and express delivery companies handled almost 4 billion express parcels during the shopping festival that lasted from November 1 to 11 last year. On November 11, 2020, alone, the number of parcels reached 675 million, an increase of 26.2 percent over the same day of the previous year, a record high.

Data from the China Federation of Logistics and Purchasing (CFLP) on December 2, 2020, showed that the logistics performance index, which tracks business volumes, new orders, employment, inventory turnover and equipment utility rates in the sector, stood at 57.5 percent in November, up by 1.2 percentage points from October. A reading above 50 percent indicates expansion and below that reflects contraction.

Learning from past experience, the November upsurge in 2020 was handled with better planning. Many consumers received their packages earlier compared with the previous year. Big online marketplaces such as Alibaba's Tmall.com and JD.com launched pre-sales, easing the pressure on courier companies. Also, based on analyses of big data for previous shopping trends, online sellers sent the products in demand to the nearest delivery outlets beforehand, which shortened the delivery time.

Extra boost to economy

While helping meet online consumption demands, the sector has also driven domestic employment and boosted the development of rural areas. A bluebook released by the Chinese Academy of Social Sciences on December 21, 2020, said China's courier sector has remained the largest in the world for six consecutive years, employing over 3.2 million people.

According to the CFLP, the employment situation in the sector showed an uptick in November 2020, with the sub-index for employment climbing 0.4 percentage point from the previous month to 104.3 percent. A reading above 100 percent indicates expansion, and below that shows contraction.

In recent years, many domestic e-commerce players, especially Nasdaq-listed Pinduoduo, have focused on exploring the market in lower-tier cities and rural areas to expand consumer bases. Through logistics networks and e-commerce platforms, the agricultural products of many remote and impoverished areas have been sold nationwide, improving farmers' income and helping them tide over the difficulties of the previous months.

The expansion of express delivery to rural areas can help unleash the potential of domestic demand, boost rural economic growth and improve consumption services in rural areas, Yang Daqing, a researcher with the China Society of Logistics, told Securities Daily.

"However, more delivery outlets need to be established and sharing of delivery labor forces and vehicles can be promoted," he added.

In April 2020, the SPB issued a guideline on expanding the rural express delivery network to improve logistics services in rural areas.

Delivery challenges

The expansion of the courier sector however has seen some issues as well. The smart locker service has triggered a debate in some places. There are lockers distributed in end-delivery areas such as universities, offices and communities where the couriers deposit the parcels, which have to be collected by the buyer. This was particularly convenient during the peak epidemic period since it helped avoid contact between the courier and recipients.

However, the country's largest smart locker company Hive Box announced in April 2020 that it would charge the recipients who failed to collect their parcels within a given time. It resulted in people saying they would boycott the company.

According to Pan, smart locker companies need to extend the storage time instead of only seeking profit. "The core competitiveness of courier companies lies in consumer-friendly services and efficient logistics systems, for which they need to apply new technologies such as the Internet of Things more," he added.

The boom of the sector has also triggered concerns over the excessive use of plastic and other wrapping paraphernalia. According to the State Administration for Market Regulation, the delivery sector generates more than 9 million tons of paper waste and about 1.8 million tons of plastic waste every year.

Postal and courier companies have stepped up efforts for greener development in recent years. According to a report released by the SPB's research and development center in October 2019, about 200 million boxes were recycled and around 2 million recyclable boxes were put into use in 2019.

To promote package recycling and reduce overpackaging, the SPB has issued instructions to reduce the use of tape, avoid secondary packaging, use more recyclable bags and add new delivery outlets with standard waste recycling facilities.

China Post, the national postal service provider, has set up packaging waste recycling facilities in more than 11,000 outlets. SF Express, one of China's top delivery companies, has also introduced such facilities in 18,000 outlets. Zhao Min, deputy head of the SPB, told a press conference on December 22, 2020, that over 90 percent of recyclable bags are being reused and the use of tape has been cut by 95 percent.

The related departments need to develop environmentally friendly packages through research and give subsidies to encourage the use of recyclable materials, Pan said. BR

(Print Edition Title: Express Expansion)

Copyedited by Sudeshna Sarkar

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