Sector still behind in terms of revenue, technology
China for the first time overtook the U.S. to become the world's top country in terms of express delivery volumes in 2014, China's State Post Bureau (SPU) said in a report released Tuesday.
The total express delivery volume reached 13.96 billion items last year, surging 51.9 percent from a year earlier, said the report, which was posted on the SPU's website.
"The robust growth was boosted by China's booming e-commerce market, which is the world's largest in terms of revenues," Yao Jianfang, an analyst with China e-Business Research Center, told the Global Times Tuesday.
The peak month for China's express delivery businesses was November, when 1.65 billion parcels were delivered, the report said. Analysts said this was related to Singles' Day, which falls on November 11 and has become the country's largest online shopping festival.
China's express delivery industry still has development opportunities in the rural market, due to farmers' rising incomes and rural residents' growing enthusiasm for starting their own e-commerce businesses, the report said.
But the domestic sector still lags behind the US in terms of the per capita express delivery volume, revenue for express delivery businesses and the application of new technologies in the sector, experts said.
The annual average express delivery volume per capita in China was nearly 10 in 2014, said the report, compared to around 30 in the U.S., Japan and European countries, according to Ma Junsheng, head of the SPU.
The total revenue generated by -China's express delivery industry was less than 80 percent of that of US package delivery giant UPS alone, Ma told news portal xinhuanet.com in March 2014.
China's express delivery companies realized total revenue of 204.54 billion yuan ($32.95 billion) in 2014, up 41.9 percent year-on-year, according to the report. In comparison, UPS' revenue was $58.2 billion in 2014.
"I believe it will take about a decade for China to surpass the U.S. in terms of revenues generated by the express delivery industry, based on growing demand at home and domestic firms' globalization," Xu Yong, chief consultant at China Express and Logistics Consulting, told the Global Times Tuesday.
Currently, China exports goods to more than 230 countries and regions, but there are not yet any domestic firms that can deliver goods to all of these areas, while the four global express delivery giants - UPS, FedEx, DHL and TNT - have this capability, the report said, citing Wei Jigang, a researcher with the Development Research Center of the State Council.
However, Chinese courier firms such as SF Express, STO Express and YTO Express have stepped up their overseas expansion in the past few years, boosted by the fast growth of cross-border e-commerce, according to the report.
U.S. e-commerce giant Amazon has said it plans to use drones for express delivery services, but experts said it will still take a long time for Chinese counterparts to adopt the technology.
"China's express delivery industry still depends on human labor, while in developed countries, new technologies such as drones have been trialed in the express delivery industry," Yao said.
Amazon announced its plan to -deliver packages by drones in December 2013. The company said the U.S. Federal Aviation Administration had recently become more open to this idea, the Wall Street Journal reported on May 5.
Drone delivery could have a big impact on traditional package deliveries, because the price that a consumer would pay for the delivery of a package weighing two kilograms could be as low as $1, and delivery times could drop below 30 minutes, Tasha Keeney, an analyst with ARK Invest, wrote in a research note on April 13.
In China, some express delivery companies such as SF Express and YTO Express have also tested drones for delivering packages in South China's Guangdong Province as well as Beijing and Shanghai, media reports said.
"But drone delivery is still far from being put into mass commercial use in China because of regulatory hurdles, high initial investment costs and safety concerns," Xu noted.
