CITIC Securities: Express brands accelerate overseas express service layout and upgrade

According to the financial news app Zhitong Finance, CITIC Securities released a research report stating that domestic express delivery brands are accelerating the layout and upgrade of overseas express delivery services. JD Logistics (02618) has newly upgraded its overseas direct mail service, with different reductions in delivery fees for the "cross-border direct purchase" and "personal item direct mail" businesses, and the service coverage has further expanded to 14 cities in 10 countries. Cainiao International Express DDP service covers three Latin American countries, further speeding up cross-border express delivery in Colombia, Chile, and Mexico. ZTO Express International has opened 5 major consolidated shipping routes, where both general cargo and special cargo can be delivered, and the warehouse can provide free packaging services, with the fastest delivery time after consolidation being 5 natural days.

JD Logistics' overseas direct mail service has been newly upgraded. On August 9th, JD Logistics made different reductions in delivery fees for the "cross-border direct purchase" and "personal item direct mail" businesses, and expanded the service coverage to 14 cities in 10 countries, comprehensively enhancing the cross-border logistics experience for brand merchants and individual consumers.

Cainiao International Express DDP service covers three Latin American countries. On August 9th, Cainiao, in collaboration with AliExpress, upgraded the "tax prepayment service" (DDP) in Colombia, Chile, and Mexico, providing more certain fulfillment services for merchants and consumers. AliExpress consumers can pay taxes online in advance through the DDP service, and parcels with upgraded priority services can save an average of 5-8 days, further speeding up cross-border express delivery in Latin America.

ZTO Express International has opened 5 major consolidated shipping routes. On August 7th, ZTO Express International announced the opening of the first phase of the "China Mainland-China Taiwan, China-South Korea, China-Japan, China-Thailand, China-Vietnam" 5 major consolidated shipping routes, where both general cargo and special cargo can be delivered, and the warehouse can provide free packaging services, with the fastest delivery time after consolidation being 5 natural days. At the same time, domestic storage fees are waived for 60 days, providing reliable, convenient, and economical consolidated shipping services.

J&T SPEED service by J&T EXPRESS-W lands in Saudi Arabia. On July 31st, J&T EXPRESS-W announced that its J&T SPEED service, meeting the growing shipping needs in the Middle East region, has officially landed in Saudi Arabia. It is reported that J&T SPEED has an average delivery time of only 58 hours, with the fastest delivery from Riyadh to Jeddah taking only 20 hours, and same-city express delivery can be delivered within 14 hours.

Risk Warning

Lower-than-expected growth in e-commerce express delivery demand

A large part of express delivery volume comes from e-commerce express delivery, and there is a risk of demand growth being lower than expected. Looking back at 2020, the express delivery industry, which experienced a brief impact from the COVID-19 pandemic, benefited from the accelerated increase in online penetration rate, leading to demand growth exceeding expectations. Meanwhile, intensified competition among e-commerce platforms and various promotional activities drove excellent performance in express delivery volume growth. However, there is a risk of e-commerce express delivery demand growth being lower than expected due to lower-than-expected marketing expenses of e-commerce platforms.

Intensifying price wars in the express delivery industry

Currently, under the supervision of express delivery price regulations, the smoke of the price war in the express delivery industry has dissipated. However, the expansion of express delivery companies' production capacity has not been fully implemented. When the demand in the express delivery industry is lower than expected or during the off-peak season, and the overall production capacity utilization of the express delivery industry cannot be met, there is a risk of intensifying price wars in the express delivery industry Labor costs have risen more than expected

During the price war among express delivery companies, dispatch costs have significantly decreased, leading to a decline in the income of frontline express delivery staff. Currently, many places in China have introduced policies to protect the income of express delivery workers, coupled with the continuous increase in labor costs, there is a possibility that the increase in labor costs for express delivery companies may exceed expectations