"At present, the domestic express market is highly competitive, and in the stock market, 'express delivery into the village' may become another incremental force point."
Recently, Gui Ning, vice president of J&T Express, said that in response to the national policy of "two in and one out" of express delivery, J&T will accelerate its efforts to "express delivery into the village", increase the logistics infrastructure in rural areas, and build more rural logistics sites through self-construction or various types of cooperation, with the goal of increasing the coverage rate of J&T villages by more than 5% by the end of 2024.
It is understood that in 2014, the State Post Bureau proposed the "express delivery to the countryside" project, which will be upgraded to the "express delivery into the village" project in 2020. In the past ten years, express delivery into the village has been deepened, and the construction of the rural mail and logistics system has been accelerated, which has played an increasingly important role in meeting the production and living needs of the rural people, helping agricultural products to go out of the village and into the city, and promoting rural revitalization.
(The picture comes from the Internet)
How to break the difficulty of express delivery into the village?
"Xinjiang is vast and sparsely populated, among which Yache County in Kashgar Prefecture has the largest number of village-level stations, the largest population, and the distance is long. Wang Yuanjian is the person in charge of J&T Kashgar and a franchisee of J&T in Kashgar, he told reporters that J&T started the network in Kashgar in 2020 and started express delivery into the village in Shache County as a pilot in July 2023.
Wang Xiaohu, Secretary of the Party Leadership Group and Director of the Kashgar Prefecture Postal Administration, introduced that Kashgar Prefecture, as the area with the largest number of organized villages in Xinjiang, has a total of 2,480 organized villages, accounting for 28.02% of the total number of organized villages in Xinjiang, and it is also the area with the heaviest task of express delivery into the village. Among them, in September 2023, J&T will officially launch express delivery into the village in Kashgar, responsible for delivering village-level express mail from the e-commerce platform to the village. As of the end of May this year, the number of J&T Express entering the village reached 6,902,300, including 286.42 from September to December 2023 and 4,038,100 from January to May 2024.
"With the continuous sinking of express delivery services and drop-off sites to the village, including a number of e-commerce platforms that have opened free shipping sessions for parcels in Xinjiang, the demand for express delivery into the village in Kashgar has continued to rise." Wang Yuanjian introduced that at present, the daily average volume of J&T in and out of Kashgar is 780,000 pieces, and nearly 20,000 pieces in the same period last year. In terms of the number of cases entering the village, taking the data of May this year as an example, the average daily number of cases entering the village in Kashgar has reached about 26,000.
It is understood that since J&T started its network in 2020, as of April 2024, the J&T Express express network has covered more than 230,000 administrative villages across the country, an increase of more than 30% from the middle of 2023. Among them, in the rural coverage rate of Xinjiang, J&T ranks first in the local franchise system, and has built more than 7,000 self-owned or cooperative collection points, which has basically realized the coverage of "express delivery into the village" in Xinjiang.
"It is difficult to make a profit in the early stage with a small volume, and it is necessary to overcome all difficulties, and only after the volume goes up can we gradually support the business model of entering the village." Feng Jiantang, the head of J&T Express Xinjiang, said that J&T also maintained a skeptical attitude when opening express delivery into the village business in Xinjiang Port, "After all, the cost of 'entering the village' is very large, especially in Xinjiang, the distance between counties is long, and some village-level sites are even seven or eight hundred kilometers apart." ”
Gui Ning also believes that in the past, due to the long distance of goods in and out of Xinjiang and between cities and counties in Xinjiang, it often led to high logistics costs, and it was difficult to get through the "last mile" in rural areas.
Enterprises accelerate express delivery into the village?
"Affected by the market environment, the promotion of 'express delivery into the village' in Kashgar has achieved remarkable results, which has stimulated the potential of the rural market and brought new growth points to the express delivery industry." Wang Xiaohu introduced that from January to May this year, the postal industry in Kashgar completed 26.5422 million pieces and 212.2528 million yuan respectively, an increase of 12.19% and 14.28% year-on-year respectively. Among them, the express business volume and business income were 5.944 million pieces and 130.7736 million yuan respectively, an increase of 66.54% and 21.90% year-on-year respectively.
"With the expansion of the market demand for express business, the volume of express business will maintain a rapid growth trend in the second quarter." According to Wang Xiaohu, it is expected that in the second quarter of 2024, the express delivery business volume in Kashgar will complete 7.3408 million pieces, a year-on-year increase of 84.06%; The revenue of express delivery business was 155.7688 million yuan, a year-on-year increase of 30.58%.
"It can't just be used as a transportation role, express delivery companies need to be integrated with local industries and businesses, and consistent with local planning, in order to better capture the larger rural market." Zhao Xiaomin, an express delivery expert, said that in the past three years, the pace of "express delivery into the village" has accelerated significantly compared with the past, but there is still a certain distance from the expectations of the entire industry. Especially in the past two years, the growth rate of the central and western regions is faster than that of the east, on the one hand, based on the guidance of national policies, on the other hand, due to industrial transfer, the express delivery into the village in the central and western regions has a very large space for development.
"In terms of business operation, express delivery into the village is not the focus of J&T China's profitability, but it has gradually become a powerful starting point for expanding business volume and express delivery network." Feng Jiantang said that in the first half of this year, the overall volume of J&T in Xinjiang grew rapidly, with an increase of more than 30% in the first half of the year.
According to J&T Express (1519. HK) previously disclosed its 2023 annual results, with revenue of about US$8.849 billion in 2023, a year-on-year increase of 21.8%; The loss for the year was about US$1.156 billion, and the profit for the same period last year was about US$1.573 billion, a year-on-year loss. Gross profit and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) turned positive for the first time at $473 million and $147 million, respectively. Notably, both gross profit and adjusted EBITDA in China turned positive for the first time. J&T Express handled a total of 18.8 billion parcels last year, a year-on-year increase of 29%. Among them, the volume of parcels in the Chinese market increased by nearly three percent year-on-year.
Feng Jiantang further introduced that the express delivery business pays attention to the scale effect, and for the company, the larger the volume, the more it can dilute the transportation and labor costs, so as to accelerate the realization of profitability. For the first, second and lower franchise partners, after the company gives a certain subsidy, they can make money faster.
In addition to express delivery companies, express franchisees and terminal sites benefit more from "express delivery into the village".
"With the continuous increase in the number of pieces entering the village, J&T has achieved breakeven in Kashgar." Wang Yuanjian said that as a first-class franchisee in Kashgar, he began to enter the village in July last year, and in August, with the large increase in the volume of the village, he invested in automation equipment from the original manual sorting upgrade, "more than 2 million yuan of equipment has been invested in half a year, and the overall profit is also considerable." Once you enter the village and do it, the cost of sharing it will be low. ”
In terms of site, Wang Xiaohu gave an example, the e-commerce service station of Baishi Wurang Village, Baixi Reke Township, Yecheng County, Kashgar Prefecture is a village-level site of J&T Express, the site rents 2,000 yuan a year, and the daily volume of J&T to the village is about 40 pieces, and the storage fee for the site is 0.3 yuan per piece, with a total daily distribution fee of about 12 yuan, about 4,380 yuan a year, which is equivalent to the rent of the store for 2 years. (Source: The Paper)