Cross-border Logistics Boosts China-ASEAN Cooperation

By Wang Jiping

As Chinese couriers establish partnerships with regional e-commerce players, a host of challenges remain

Cross-border Logistics Boosts China-ASEAN Cooperation

By Wang Jiping

As Chinese couriers establish partnerships with regional e-commerce players, a host of challenges remain

With e-commerce booming in China, the logistics industry has ushered in a new period of rapid growth. In addition to improving domestic business, Chinese couriers like SF Express have also established partnership with cross-border e-commerce players to expand into overseas markets. What difficulties do they have to overcome? What will industry trends be like in 2017?

High Cost, Low Efficiency

According to a recent investigation into poor crossborder shopping conducted by US firm Forrester Research, 51 percent of dissatisfied customers attribute their bad shopping experience to exorbitant shipping rates. Meanwhile, 47 percent attribute their dissatisfaction to slow shipping.

Zhang Kang, senior director of eBay Global Shipping, pointed out three main reasons why the industry struggles with international orders. First, since customers’ needs are becoming increasingly diversified, there are newly emerging requirements related to packaging and shipping. Second, there is a lack of consistency in regard to e-commerce-related policies formulated by both government authorities and market players, because they are constantly improving according to actual conditions.

“The third reason is that cross-border logistics is still in a fragmented state,”Zhang explained. “In fact, delivery services should be an indispensable part of e-commerce, rather than a separate business. An updated business model is in urgent need.”

Gan Wei, vice president of the China Electronic Commerce Logistics Industry Alliance, noted that more than half of Chinese cross-border e-commerce courier services are provided by multinational companies, which means China lags behind in terms of logistics enterprises capable of global shipping. Many aspects need to be improved, including infrastructure, shipping networks and managerial expertise.

Smart Logistics

How can the above problems be solved? Many industry experts believe that in the age of big data, smart logistics is the key to the future.

It is generally agreed upon that smart logistics integrate artificial intelligence and data processing with a material handling system, enabling these systems to react and act in a correspondingly smart manner. It facilitates sensor networks and mobile communication to trace the flow of goods from the moment they are initially shipped, ensuring that the flow of information is faster than that of goods. With smart logistics, the entire delivery process is connected and controlled by automation.

Wei Jigang, director of the Research Department of Industrial Economics, Development Research Centerof the State Council of China, explained that the key to realizing smart logistics lies in the transformation and upgrading of the entire logistics and supply chain. He also noted that it is important to optimize workflow and take a data-driven approach to breed innovation in terms of business models.

According to Zhang, courier companies need to focus on order processing and information tracking to increase efficiency and promote smart logistics. They should make ef f orts to improve international multimodal transport and information sharing by closely connecting dif f erent links in warehousing and delivery. At the same time, strategic cooperation with supply chain partners needs to be strengthened and the management of logistics supply chain needs to be improved by adopting models such as vendor-managed inventory and just-in-time logistics.

Some logistics companies have made active efforts in business model innovation. An automated packaging system developed by the Shanghai KW Supply Chain Management Company uses a set of specialized machines to enhance packaging efficiency in printing, labeling, weighing and sorting. The company also employs digital storage of delivery information to avoid loss or damage.

Workers busy loading an SF air transport plane.

With smart logistics, the entire delivery process is connected and controlled by automation.

Cooperation with ASEAN Countries

For Chinese enterprises aspiring to expand cross-border delivery businesses, cooperation with overseas market players is essential. Industry experts find cooperation between China and ASEAN in this field promising, given geographical and cultural proximity.

SF Express, one of China’s leading courier services, first entered the ASEAN market as early as 2010. Over the course of the following six years, its delivery capability reached almost all ASEAN countries, including Singapore, Malaysia, Thailand, Vietnam, Myanmar, Indonesia, Cambodia and Brunei. To provide ASEAN clients with customized service adapting to local climate and geographical features, other leading Chinese enterprises like Shanghai YTO Express and Yunda Express plan to of f er cross-island and longdistance transport as the focus of their future development.

Cross-border logistics between China and ASEAN is going to be a major impetus for regional economic cooperation in the future, according to Bai Ming, deputy director of the International Market Research Department at the Chinese Academy of International Trade and Economic Cooperation, part of China’s Ministry of Commerce. In fact, this has become an inevitable trend since the upgrading protocol of the China-ASEAN Free Trade Area came into force on July 1, 2016. As trade between the two sides is expected to grow even faster, there is set to be an increasing amount of Chinese products exported to ASEAN countries. At the same time, ASEAN countries also want to export high-quality fruits and other agricultural products to China, which requires both sides to establish functional and stable logistics networks.

“Some ASEAN countries like Indonesia hope to find Chinese partners in the logistics industry adequate for launching transport infrastructure construction projects like port extension,” Bai said. “Cooperation in this field would be conducive to lowering domestic shipping costs and could help them play a better role as gateway to the 21st Century Maritime Silk Road.”