Image source @ Visual China
Text | Market capitalization list, author | Zhuzhang, editor | Jiaxin
In 1993, the 23-year-old Wang Wei managed to scrape together 100,000 yuan and set up a company called "Shuntong" to do express mail exchanges from Hong Kong to the mainland, but in less than half a year, he was betrayed by his partners, and then changed the name of the company to "SF".
At the same time, 20-year-old Tonglu nie Tengfei just set up the Shentong Comprehensive Service Department, the company's business is very simple, to help enterprises rush to the customs closure on the same day, the customs declaration is delivered, the two ends of the business are Shanghai and Hangzhou.
This company is the predecessor of Shentong.
It was also in this year that Chen Ping, who had studied in Japan and witnessed the Japanese express delivery home express, established the home express delivery in Beijing.
Since the beginning of this year, China's first batch of private express delivery companies broke ground, and in the next thirty years, they first slowly moved forward under the conflict between state-owned express delivery companies and private express delivery companies, and then walked through the golden age under the double impact of e-commerce and mobile Internet.
In recent years, China's express delivery industry bid farewell to high-speed growth, after the two price wars, small and medium-sized enterprises cleared, head enterprises under pressure, "barbarian" pole rabbit entry, Jingdong logistics acquisition of Debon Express, bringing new changes to the industry.
The sudden rise of the rabbit and the possibility of Debon selling himself are enough to warn the surviving players in the industry: the war is far from over, the new changes in this industry do not know which day will come, and no one can guarantee that the next fall will not be themselves.
1 From reckless to regular army
SF occupies a substantial monopoly position in the high-end express market, and the Tonglu gang rules the express delivery jianghu, that is a later thing, in the first few years, the nascent express private enterprises, it seems that there is almost no competitiveness.
At that time, China's express delivery industry was still in its infancy, and its market share was mainly occupied by China Post, and even in 1997, a few years later, postal companies still occupied 97% of the market share of the express delivery industry.
For a long time, Chen Ping, who was delivered by the house, had to "sweep the street" in order to solicit business, and Zhan Jisheng, who came out of Shentong to found the daily express, was repeatedly driven out of the gate by customers as a leather bag company.
The good news is that from 1993 to 2002, China's express delivery market grew steadily, with an average annual compound growth rate of 22.83%, although the market is still in the hands of state-owned enterprises, but the gradual expansion of the market size shows that this is a business that can see the future.
In the process of this growing market, the story frequently staged in the history of reform and opening up will be staged again in the express delivery industry: private enterprises with stronger desire to survive and more flexible turnaround will respond to market demand faster, innovate models more quickly, and become their biggest killer in the future, growing into a big tree in the cracks of the near monopoly of EMS.
By around 2003, the "Tonglu Gang" had been assembled, and almost all of the first players in China's express delivery industry had entered. During this period, the earliest admissions of SF, home express delivery, And Shentong have formed a three-legged pattern in South China, North China, Jiangsu, Zhejiang and Shanghai.
When competition inevitably comes, the path to achieve scale expansion in the industry has diverged: one road is the direct operation model represented by SF and home delivery; the other is the franchise model pioneered by Shentong.
In hindsight, franchising may not be the best answer in the industry.
The reason is that it can help a company quickly attack the city and grasp a larger business scale, but this model itself will conflict with operational efficiency, and the disadvantages will be reflected in the future under the interest demands of franchisees and headquarters that are difficult to balance, and the interests of large franchisees and small and medium-sized franchisees.
However, this year, the private express delivery companies that have gradually grown into regular armies have no time to take care of these.
In this year, the State Post Bureau began to rectify the interaction and long-term special inspection of the "illegal delivery of documents", and almost all private express delivery companies began a "cat and mouse" game with the postal service.
A detail was mentioned in the book "Everywhere", "2003 was the most stringent time to raid the 'black express', and in Dongguan, every village had postal law enforcement officers and local security guards checking at the entrance of the village. ”
By the end of this year, the fifth draft of the Postal Law (Revised Draft) has poured cold water on all players in the industry, which stipulates that for foreign-funded enterprises and private express delivery companies, private express delivery businesses under 500 grams are monopolized by the postal service. Subsequently, in 2004, 2006 and 2009, the postal monopoly letter standard was reduced to less than 150 grams.
Looking back at 2003 in hindsight, this was a key turning point for China's private express delivery companies.
A number of enterprises eager to expand the scale seem to have found a way to market-oriented expansion, but the contradiction between private enterprises and state-owned enterprises is constantly enlarging, including China Post, the national brand players have felt a sense of oppression - by 2006, in terms of express delivery business volume, the market share of state-owned, private and foreign-funded enterprises was 58.4%, 27%, and 14.6%, respectively, and private enterprises surpassed foreign capital to become the second largest strength in China's express delivery industry.
02 E-commerce brings a golden age
Also in 2003, China's express delivery industry ushered in the biggest variable: e-commerce. SARS, which swept the country, made e-commerce popular rapidly, people liked Taobao, which had just been launched, and the express delivery industry ushered in its golden age.
In the early years, express delivery and delivery were two different things: express delivery more refers to the transportation of corporate documents and samples, and later e-commerce personal to individual, enterprise to individual, is called delivery. Later, the unified statement in the industry is that business timeliness and e-commerce parts.
Before the rise of e-commerce, business time-sensitive parts were almost the only single source of the express delivery industry, but after the emergence of e-commerce, the proportion of e-commerce parts continued to rise. Since 2012, e-commerce has become the largest market in China's express delivery industry.
This impact from the demand side will soon be reflected in the supply side of express delivery companies. After private express delivery companies officially obtained legal status in 2009, the express delivery industry drove into the high-speed lane.
From 2011 to 2016, under the double impact of mobile Internet + e-commerce, the annual business volume growth rate of the express delivery industry reached 50%-60%, and the average annual volume exceeded 10 billion pieces.
Before that, Home Express was once SF's only direct competitor, but it failed to withstand the 2008 financial crisis and withdrew from the table before the arrival of the e-commerce dividend.
On the contrary, SF, after experiencing the systematic transformation of joining the franchise to direct operation in 2002, tasted the sweetness of air freight during the SARS period in 2004, and by 2009, SF Airlines was established, making its position in the field of business aging parts increasingly stable. By 2012, SF had become the second largest express delivery company after China Post Express, with a market share of nearly 20%.
The Mastery Department takes a different path.
After 2007, they have successively accessed the Taobao ecology, the latter's GMV that has risen year by year has become their stable single source, in order to squeeze a higher market share, they have continuously expanded the network through the way of joining the system, and the focus of business has also shifted to e-commerce express.
In this period, it is necessary to mention JD.com and Ali. In 2007, Liu Qiangdong decided to build a logistics system with an integrated warehouse; Ma Yun made it clear in 2013 that Ali would not do express delivery, but it joined forces with SF and Three Links yida to form a rookie network.
Cainiao network is a special species of China's express delivery industry, it jumped out of the express delivery industry asset-heavy operation model, not to build their own network to develop express delivery business, but to benefit from the same Taobao in the e-commerce resources advantages, the express delivery companies together, hoping to improve the efficiency and quality of the logistics industry.
However, not doing heavy assets does not mean not investing, from refining the strategy to the whole logistics chain to digital upgrading, Ali has invested in the rookie network for many years.
Now, no one can ignore this different player, its CEO Wan Lin pointed out in 2021 that Cainiao's development goal is to become a global industrial Internet company driven by customer value, and to deeply integrate the operations, scenarios, facilities and Internet technology of the logistics industry.
The rapid growth of the demand side, while attracting more players to enter, during this period, the industry investment and financing reached a climax, small and medium-sized players in turn from the network, multi-enterprise cross-track entry, private express delivery companies are also divided into two echelons: the first echelon of Zhongtong, Yunda, Yuantong, Shentong and Baishi, etc., in 2018 The market share reached 65%; the second echelon of daily express, Yousu express, Suer express, etc., is based on the regional network.
With the rapid expansion of the express delivery market and the continuous expansion of the network of express delivery companies, China has the best e-commerce infrastructure in the world. In the field of high-end time-sensitive parts, there are SF and China Post Express; in the field of e-commerce parts, there are three links and one reach. This does not include JD.com, which has built its own logistics.
Consumers are satisfied with not only the extensive express delivery network, but also the overall downward trend of express delivery fees. Of course, the other side of the express delivery fee is that the single ticket revenue of the express delivery industry is declining, and in the process of experiencing rapid expansion of the market scale, the express delivery industry has become a business that relies on small profits and multiple effects to make money.
If express delivery companies want to make more money, they must have a larger market scale, and when the e-commerce dividend is gradually exhausted, the competition in the industry is no longer as calm as before.
03 Price Wars: Many companies are in a pool of blood
At the end of 2016, the proportion of mobile online shopping users reached 94.5%. In the future, the transaction growth rate of the e-commerce market will also begin to decline, and the penetration rate of monthly active users in the mainland mobile shopping App industry will exceed 90%, showing signs of saturation.
This means that the dividends of e-commerce and mobile Internet, which have leveraged the rapid growth of the express delivery industry in the past few years, are about to be eaten.
When the express delivery industry entered a period of low-speed growth, and then entered the stock market competition, the price war broke out.
In the past few years, price wars between express delivery industries are not uncommon, but many of the negative effects brought about by price wars, express delivery companies can hedge through the increase in business volume and the decline in unit costs under the scale effect, which is a benign game as a whole.
But the problem is that if a company pushes the price too low, then vicious competition will replace the benign game.
The first big price war took place in June 2019.
Shentong lowered the price per ticket to 9 cents, and this battle was even fought until the salary could not be paid quickly. This kind of killing eight hundred self-loss and losing money to a thousand money only lasted for one month. At the end of July, the bosses of various express delivery companies came to Yiwu to negotiate before marking the stop sign.
Behind this price war, the ambitions of various express delivery companies for scale growth have been exposed.
Industrial Securities pointed out in a report that Zhongtong, the first market share, aims to increase its business volume by 15% over the industry average growth rate in 2019; YTO's goal is to break through the 10 billion piece mark, equivalent to an increase of about 50%; Best's goal is to increase its business growth rate by 1.5 times that of the industry; and Shentong's goal is to increase its market share by 1%, that is, to increase by 35%.
The head of a branch of a courier company in Yiwu recalled the price war afterwards, saying that at that time, the market was really a knife and a knife, and many half-dead companies were killed. He recalled, "There was a company called Express Express, their outlets were not far from our venue, and overnight I found that they stopped everything, and the boss sat there selling waste, which was very poor, that is, overnight, saying that it was gone." ”
At that time, no one could have predicted that in just half a year, a company from Southeast Asia, Jitu, would once again launch an even more fierce price war, and it would be more than a year.
In March 2020, someone in Yiwu's cattle herd shouted the price of "8 hairs nationwide", and the spoiler was Ji Rabbit.
According to media reports, the early stage of the pole rabbit per ticket is 1-1.5 yuan lower than the Tongda department, and the shipment enjoys the first 5 yuan discount in the country, which is nearly half cheaper than the Tongda department, and the person in charge of the extreme rabbit has said that he is ready to lose money for two years.
Under the cruel price war, in 2020, the single ticket revenue of the express delivery industry will drop by 10%, and the single ticket revenue of the Tongda Department, Baishi and SF will fall by an average of between 20% and 30%, but the decline in the unit cost of the express delivery industry can basically only be maintained in the range of 10%-20%.
This year, the growth rate of the express delivery industry came to 31%, Zhongtong, Yunda, Shentong as the direct beneficiaries of the high prosperity of e-commerce express, in the case of high growth in business volume, profits have shown negative growth, only Yuantong barely maintained 6% of the net profit growth attributable to the mother.
By the first quarter of 2021, SF had lost nearly 1 billion yuan as never before, and Wang Wei publicly apologized to shareholders: "The first quarter was not running well, and I have an unshirkable responsibility." ”
Best Express's 2021 semi-annual report has an asset-liability ratio of more than 95%, almost insolvent, and then it is eaten by the rabbit.
At a time when the head express delivery companies are fighting for the price war, few people have focused on the smaller mid-tail express delivery companies, and in recent years, a considerable part of them have had to be forced to leave the industry.
According to the statistics of China Merchants Securities, from April 2018 to December 2019, many tail express delivery companies such as Express Express, Aneng Express, Rufeng Express, Youth Hostel Logistics, Guotong Express, Press wind express, Pinjun Express, Quanyi Express, and Yuancheng Logistics have fallen into different degrees of operational dilemma.
Their final outcome: either they fall or they are sold.
04 The tide of mergers and acquisitions is coming
What does the price war bring to the industry?
In the short term, it brings a period of extremely low express delivery fees, is the mourning of small and medium-sized express delivery companies, is the performance of the three links and one SF, and is the pole rabbit to break into the market that has become stable.
In the long run, it brings about new pattern changes, and it also reminds the head players who have already established themselves that the walls built solely on the scale of the higher market are not so strong.
As SF executives said of Jitu at the 2020 financial report communication meeting: "No matter how large the scale is, it cannot hold the market, which is a very profound lesson we see from our strategic perspective." ”
This is not to say that scale is not important, but that scale wars have escalated again – in the past it was possible to be big enough to win, and now it is not only big enough, but also comprehensive enough.
At the beginning of the month, when the news that Jingdong may acquire Debon Express came out, a number of brokerage research reports gave a unanimous view: the current mainland express delivery industry is moving from a centralized stage to an oligopoly, which is manifested in the accelerated differentiation of head enterprises and the increase in concentration.
China Merchants Securities judged in a research report that China's express delivery industry will usher in a period of intensive mergers and acquisitions, showing two major trends:
First, large-scale interbank mergers and acquisitions will continue to emerge;
Second, diversified mergers and acquisitions are becoming more frequent.
This is a stage that the express delivery industry will go through internationally. China Merchants Securities pointed out that the mergers and acquisitions of international integrated logistics enterprises show obvious cyclical characteristics, from the perspective of mergers and acquisitions, the development of the express delivery industry can be divided into four stages: start-up, growth, concentration and oligopoly, and the current mainland express delivery industry is in the process of moving from the third stage to the fourth extreme.
The most typical examples are the international integrated logistics giants UPS and FedEx. The growth routes of the two companies are not the same, but in the end, they have grown into monopoly giants through large-scale diversified mergers and acquisitions.
UPS, for example, when it was founded in Seattle in 1907, only provided courier, errands and local same-city delivery services, and then with a large domestic acquisition, by 1989, its services expanded to the Middle East, Africa and the Pacific Rim, covering more than 220 countries or regions around the world.
After 1990, UPS switched to a diversified M&A model. It has focused on the enrichment of supply chain logistics subdivisions (high-value logistics, parts logistics - special logistics, pharmaceutical logistics, etc.) and the opening up of upstream and downstream links of the supply chain (trade financing, international freight forwarding, international trade consulting, etc.), and has grown into an integrated logistics service giant.
This kind of large-scale diversified mergers and acquisitions is likely to become the path that China's express delivery industry will take in the future.
In the past few years, Suning's acquisition of Daily Express in 2017, Shentong's acquisition of the transit business asset group of several companies in Shenzhen in 2018, SF's acquisition of Kerry Logistics in 2020, and Jitu's acquisition of Best in 2021 have all released this signal.
PwC believes that the competition of express delivery is gradually entering the era of giants under big capital. According to a data released by it, in the first half of 2021, although there were only 3 transactions in the domestic express delivery industry, they were all large transactions of more than 1 billion yuan, and the transaction scale increased by 36% month-on-month to 14.585 billion yuan.
The underlying logic of this trend of large mergers and acquisitions is a comprehensive logistics service provider, which is likely to be the ultimate form of the development of logistics enterprises in the mainland.
For example, from 2018 to 2021, SF has successively acquired the supply chain business of Simpang Logistics, Xia Hui and DPDHL in Chinese mainland, Hong Kong and Macau, and invested in Flexport and Kerry Logistics, covering express transportation, cold chain logistics, supply chain logistics, cross-border supply chain and other businesses.
This may just be the beginning, now the market share of "three links and one reach" is about 60%, and together with SF, they collectively occupy 70% of the market share of the industry. But in the U.S. and Japanese markets, the market share of the top four express delivery companies has exceeded 90%.
05 Conclusion
When the express delivery industry moves towards oligopolization along its cyclical characteristics, there are likely to be only a few express delivery companies left in China in the future.
Now the "three links and one reach", SF, Jitu, Jingdong Logistics, each of them, may become the largest elephant in China's express delivery industry and difficult to catch up with peers, and may also be eaten by another family like Baishi.
In the face of a bigger storm, what they need to do next is far more challenging than all the previous experiences.
China's economic development has now entered the late stage of industrialization, the era of resource dividend and demographic dividend has passed, the future will enter a new stage dominated by value dividends and technological dividends, how to more effectively manage, optimize, allocate and revitalize resources is a common problem.
Logistics and supply chains are important starting points and important tools.
From the perspective of technical path, the current logistics industry is in the process of moving from automation to intelligence, and to achieve intelligent upgrading, it requires higher capital investment, longer time cycle, more sustained patient investment, and more efficient enterprise management.
Any express delivery company that wants to become an integrated logistics service company cannot ignore these potential challenges.
Even if one or more of them can grow into a substantial oligarch like the overseas giants, they have to always be vigilant that oligarchy not only means status, but also comes with potential risk points, such as whether they can fulfill their social responsibilities and whether they will touch the red line of anti-monopoly.
bibliography:
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