According to the financial report released by ZTO Express-W (02057) on August 21st, the parcel volume in the second quarter was 8.45 billion, a year-on-year increase of 10.1%. The company maintained high-quality service and customer satisfaction. The adjusted net profit increased by 10.9% to RMB 2.8 billion, and the cash flow generated from operating activities was RMB 3.5 billion.

ZTO founder, chairman and CEO Lai Meisong said, 'In the second quarter of this year, we continued to focus on our balanced growth strategy by optimizing parcel volume structure, improving operational efficiency, helping reduce delivery costs, and increasing the profitability of sites and couriers. We are progressing from high quantity to high quality transformation. While achieving a parcel volume of 8.45 billion, our market share decreased by 2 percentage points to 19.6% compared to the same period last year. The adjusted net profit increased by 10.9% to RMB 2.8 billion. By the end of this year, we expect the parcel volume of ZTO's fragmented business to double. We hope to establish a solid presence outside of our 'Tongda' brand in terms of brand awareness and customer satisfaction, and further expand our leading advantage in profit growth.'

Lai Meisong added, 'Despite maintaining fast business growth in the express delivery industry, competition remains fierce and the industry as a whole faces significant pressure. Ensuring fair and stable networks is crucial for us. Our measures to increase the proportion of non-electronic business items in terms of collection and delivery will provide franchisees and couriers with opportunities to increase income and ultimately offer significant long-term pricing advantages to the front end.'

ZTO's CFO Yan Huiping said, 'Our core ticket revenue remained stable at RMB 1.24, and the decrease in unit price caused by incremental subsidies and lighter parcel weight was offset by the positive impact of the increased proportion of high-value non-electronic business items. Thanks to improved operational efficiency in the fleet and better resource utilization, our sorting and transportation costs per ticket decreased by 2%. At the same time, the proportion of management expenses to revenue remained stable at around 5.5%. Operating cash flow was RMB 3.5 billion, and capital expenditure was RMB 1.3 billion.'

Yan Huiping added, 'Business volume is not secondary, it contributes to economies of scale. We continue to explore progress in balancing risks and opportunities, aiming to achieve reasonable profit levels and maximize value. We reiterate our guidance of 15% to 18% growth in business volume for 2024. Strengthening long-term competitive advantages, moving away from ineffective homogeneous price competition, building a healthier and stronger partner network, and fostering a group of small couriers with entrepreneurial spirit will prepare us to embrace the vast opportunities in the future logistics industry.'

From a business data perspective, as of June 30, 2024, ZTO has 96 sorting centers, approximately 31,000 collection/delivery points, about 6,000 direct network partners, approximately 3,800 sorting center transportation routes, and over 10,000 owned long-haul vehicles, including more than 9,200 high-capacity vehicles with a length of 15 to 17 meters.

Help more people start their own businesses and find employment.

In the first half of the year, ZTO Express actively optimized its model and empowered its couriers at various locations. As a key town for agricultural products, ZTO Express in Fuyang and Funan, Anhui actively optimized, adopting the direct distribution model - allowing couriers more time to develop customers, and granting pricing and profit space to the outlets, motivating the collection of more scattered pieces.

"Now I have more time to connect with customers, I can collect dozens of scattered pieces every day, earn more income, and work even harder," said Ma Shumeng, a courier from the Funan outlet.

ZTO Express has produced a group of business stars with innovative thinking and service innovation across the network. They have made breakthroughs in developing scattered pieces, on-demand door-to-door services, and commercial overlays, enhancing the quality of ZTO Express services, and increasing revenue.

Help clients enhance their competitiveness.

According to CCTV news reported in August this year, in Jieyang, Guangdong, ZTO Express deeply empowered the local small and medium e-commerce industry. Ni Zekai, a post-00s generation, owns over 40 online stores with daily orders exceeding tens of thousands. ZTO Express provides him with end-to-end collection services. "We only need to print labels and package inside the warehouse, and ZTO has a vehicle to pick up the goods at our door. The delivery is very fast, 24 hours in the province, 48 hours nationwide."

Nearly 20 ZTO Express outlets nationwide have been selected for the national 'Express Service Modern Agriculture Demonstration Project Creation List', with service areas including Yuncheng apples, Suizhou mushrooms, Liuzhou snail noodles, Xinjiang paper-skinned walnuts, and more.

In the second quarter of 2024, in the express service satisfaction survey and on-time delivery rate test results announced by the State Post Bureau, ZTO Express's 72-hour on-time delivery rate increased by 0.5% year-on-year. Maintaining a leading position in this data, it continues to create value and enhance competitiveness for millions of businesses that choose ZTO Express.

Help reduce the social logistics costs.

In July of this year, Hubei ZTO Express introduced 8 unmanned delivery vehicles at the Huangpi Panlongcheng site in Wuhan, Hubei, and the daily operation of the site has undergone significant changes. "The transportation cost of express packages from the transfer site to the community site has been reduced by 50%, and the 8 vehicles can save the site nearly 2000 yuan in distribution costs every day," said Wu Feiyong, the person in charge of the Panlongcheng site.

In the low-altitude economy, ZTO Express has successfully completed the first cargo flight of a large unmanned aerial vehicle in Xinjiang, with a flight time of 2 hours and a flight distance of over 500 kilometers. Currently, multiple routes in Xinjiang have achieved normalized flights.

Unmanned vehicles and drones, as typical "new productive forces", have more fully extended the digital and intelligent tentacles to various links of collection, transfer, and delivery, smoothing the "last mile" of express services for the public.