Part I: The Amazing Express Race – China to US

Shanghai – After last week’s Cargo Facts Asia symposium, the Cargo Facts team spent a day exploring the city. Along with the other conference attendees, we had heard about the astounding growth China’s express sector has experienced since 2016. But we wondered, with the increasing innovation in the express sector globally alongside growth in cross-border e-commerce, how fast and convenient is it, really, for an individual shipper to send a package from China to the United States? And, just as importantly, how do express companies without own-operated long-haul freighter operations actually execute point-to-point international deliveries?

We decided to find out.

To test out China’s express shipping experience, the Cargo Facts team assembled three identical packages weighing in at under 250 grams each and including typical tourist souvenirs – a keychain, chopsticks, and a magnet. We were advised by Shanghai locals, including one express company employee, that the best way to ship internationally from China is still via UPS or DHL Express, thanks to the global networks of those integrators. Undoubtedly, FedEx, UPS, or DHL Express were all capable of handling the shipment. However, to illuminate how China’s express companies would rise to this challenge, we selected China Post, Shentong Express (STO Express), and SF Express as the participants in our express race from Shanghai to the Cargo Facts office in Seattle.

But first, a bit of background on the industry…

Last year, China’s total express delivery volume exceeded forty billion pieces for the first time, an increase of 28% y-o-y compared with 2016 volumes, to a staggering twenty-nine express parcels per capita. Although robust growth is expected to persist, the growth figure represents slight moderation after compound annual growth for the industry averaged 42% for the past decade.

Tempered demand growth, however, won’t necessarily slow the expansion of domestic freighter fleets operated by, or on behalf of China’s express companies. During a panel discussion about Asian Express Networks at Cargo Facts Asia 2018, David Su, Chairman, YTO Cargo Airlines Co., wowed the audience with statistics that YTO Express handled five billion parcels last year, despite operating just seven freighters. With ten firm orders and ten options for 737-800BCFs with Boeing, and a separate order for an undisclosed number of 757-200PCFs from Precision Aircraft Solutions, more narrowbody freighters are on the way.

Although in the near-term China’s domestic freighter networks are expected to continue expanding, pressure from China’s advanced high-speed rail network, improved trucking options, and drones may reduce the scale of the domestic air express network required to meet domestic demand. Su estimated that within six to ten years, competition from rail will become a formidable competitor to air freight for domestic shipments. “It is better to focus on cross-border business. Air will be competitive in the long-term for long-haul transportation,” he said.  

Luckily for express couriers with international ambitions, growing international express volumes into and out of China (including Hong Kong, Macau and Taiwan) continue to outpace domestic growth with an increase of 33.8% y-o-y in 2017 to 830 million pieces, according to the State Post Bureau’s “China Express Development Index Report for March 2018.”

And now, the contenders: