Air China Announces its Plan for Global Expansion; Shein Begins Building a New Supply Chain Center in Guangzhou
Latest Dynamics of Logistics & Supply Chains in China's eCom
Welcome to the first release of China eCom Logistics, a weekly newsletter aimed at examining the detailed workings of logistics and supply chains in the cross-border e-commerce landscape of China.
Here’s our pick for last week’s news:
Air China Announces its Plan for Global Expansion
JD Logistics Reports 40% Increase in International Orders
YTO Cargo Airlines Inaugurated its Hangzhou-Budapest Route
SF's Supply Chain and International Revenue Surges 27.16% to $937.8M in August
Hong Kong's Intercont Files for $35M IPO
Shein Begins Building a New Supply Chain Center in Guangzhou
Cainiao Opens a New Cross-Border Merchant Center in Xiamen
Lalatech Updates Prospectus for Hong Kong Listing
Air China Announces its Plan for Global Expansion
China National Aviation Holding Corporation Limited, also known as Air China and one of the nation's top three aviation groups, is gearing up to go global. According to Vice President Yan Fei, who spoke at the Global Sustainable Transport Summit on September 25, Air China plans to set up strategic logistics hubs abroad based on market demands and evolving customer needs.
Air China Cargo has committed to expanding its cargo fleet, which stood at 15 aircraft in July 2024, with plans to increase to 19 by the year's end and 24 by 2025. Currently, Air China operates 17 cargo routes connecting 12 international destinations, with its passenger capacity covering 64 stations in 43 countries and regions—a network totaling 114 routes.
With cross-border e-commerce on the rise, China's air cargo market is seeing huge growth. The Ministry of Commerce reports that over the past five years, cross-border e-commerce in China has grown more than tenfold. In Q1 2024, imports and exports in this sector hit $81.64 billion, up by 9.6%, with exports rising 14% to $63.32 billion.
JD Logistics Reports 40% Increase in International Orders
Since September, JD Logistics has seen over a 40% rise in international orders, with most packages coming from Guangdong Province in China. North America and Europe remain top destinations, with 56% of September's orders going to the U.S. and Canada.
On August 15, JD Logistics released its financial statement for the first half of 2024, recording total revenue of $12.20 billion, up 11% from last year, and an adjusted net profit of $440.98 million, a 2631.2% jump. By June 2024, JD Logistics had been profitable for five straight quarters, with profits continuing to grow.
In the first half of the year, the company expanded its overseas operations with new warehouses in the U.S. and UAE. As of June 30, 2024, JD Logistics operated nearly 100 bonded, direct mail, and overseas warehouses worldwide, covering almost 1 million square meters in total and major countries and regions.
YTO Cargo Airlines Inaugurated its Hangzhou-Budapest Route
On September 19, YTO Cargo Airlines made its first flight from Hangzhou to Budapest, Hungary, packed with 50 tons of cargo on a Boeing 767 freighter. This route, "Hangzhou–Astana–Budapest," operates twice weekly and marks YTO's first China-Europe cargo line of the year, offering over 200 tons of shipping capacity per week. Outbound flights will carry cross-border e-commerce parcels and electronic components, with return flights loaded with auto parts.
So far this year, eight new Chinese cargo routes to Budapest have launched. Located in the heart of Europe, Hungary, with its capital Budapest, offers quick access to Europe's major cities, making it an ideal hub for Chinese goods and a strategic entry point into the European market.
SF's Supply Chain and International Revenue Surges 27.16% to $937.8M in August
On September 18, SF Holding reported continued growth for August, reaching a total revenue of $3.25 billion, up 13.36% from last year. The company's express delivery services brought in $2.31 billion, an 8.58% increase, with orders up 14.62% to 1.043 billion. Its supply chain and international sectors showed strong performance too, with revenue at $937.80 million, up 27.16%, emerging as a key growth area. This segment has seen revenue of over $848.04 million in the last two months, with an annual growth rate of nearly 30%.
SF's H-share listing process in Hong Kong is also progressing smoothly. On September 13, SF announced that the HKSE reviewed its H-share listing application. Experts suggest that the A+H dual listing will strengthen SF's international strategy and provide a more extensive financing platform as it enters global markets.
Hong Kong's Intercont Files for $35M IPO
Hong Kong-based shipping company Intercont (Cayman) Limited recently filed for an IPO with the U.S. Securities and Exchange Commission (SEC), aiming to raise up to $35 million.
Founded in 2023, Intercont generates income from time charters and ship management, with around two-thirds of its revenue coming from time charters. Last year, its revenue grew by 3.5% to $32.4 million, while net profit rose by 28% to $10.9 million. However, revenue for the second half of the year dropped by 37% to $12.4 million, with the gross margin declining from 50% to 27% as freight rates get back to normal after surging during the pandemic.
Shein Begins Building a New Supply Chain Center in Guangzhou
The project started construction in Zhongxin Town, Zengcheng District, contributing to Guangzhou's goal of becoming a major player in cross-border e-commerce industry. With a total investment of $1.41 billion, the project will be completed in three phases. It is expected to generate over $14.13 billion in annual export.
The first phase alone will invest $521.55 million and cover more than 800,000 square meters. It will handle order fulfillment tasks like warehousing, shipping, and payment processing. At its peak, it’s anticipated to draw around 30,000 to 40,000 industry talents.
Cainiao Opens a New Cross-Border Merchant Center in Xiamen
On September 27, Cainiao officially opened its Cross-Border Merchant Center in Xiamen, following the launch of its first center in Yiwu in June. This provides small and medium-sized cross-border merchants in East and South China with a local "service center," making it easier for them to access Cainiao's efficient and affordable international express services.
According to earlier reports, on June 24, Cainiao announced its plan to build seven cross-border merchant centers nationwide in 2024, covering 20 industrial belts and starting from Yiwu. Cainiao emphasized that this move could lead to a 5% to 10% reduction in logistics costs for SMEs in cross-border business.
Lalatech Updates Prospectus for Hong Kong Listing
On October 2, 2024, Lalatech updated its prospectus, moving forward with its main board listing process on the Hong Kong Stock Exchange. Originally established in Hong Kong in 2013, Lalatech expanded to mainland China and various Southeast Asian countries by 2014 and later ventured into the Latin American market in 2019. As of June 30, 2024, it operates in 11 markets across over 400 cities, including mainland China, Hong Kong, Thailand, the Philippines, Singapore, Indonesia, Vietnam, Malaysia, Mexico, Brazil, and Bangladesh.
Frost & Sullivan's report indicates that Lalatech is the top platform globally in terms of closed-loop freight transactions for the first half of 2024, holding a market share of 53.9%. It also holds the top spot in intra-city logistics transactions, monthly active merchants, and total orders completed worldwide.
In the first half of this year, Lalatech processed over 338 million orders, with a total transaction value of nearly $5 billion. The company's revenues jumped from $845 million in 2021 to $1.036 billion in 2022, and then to $1.334 billion in 2023. In H1 2024, Lalatech reported $709 million in revenue, an 18.2% increase from last year, with an adjusted net profit of $213 million. Revenue from international markets made up 9.3% of total earnings, marking a 0.4% rise from the same period last year.
On top of that, Lalatech is pushing for innovation and branching out into different markets. Besides their main focus on road freight, the company is also getting into intra-city and cross-city logistics, enterprise logistics, moving, less-than-truckload deliveries, errand running, and car services.