Finance and Economics Society News on August 31 (Reporter Hu Haoqiong): The express delivery industry's "billion-parcel" milestone has been reached ahead of schedule, and YTO Express Yunda Holding (600233.SH) has achieved a substantial year-on-year growth in express delivery business volume. In recent years, the "Number One Project" implemented by YTO has also increased the profitability of its branches and improved the stability of the branches.

Finance and Economics Society reporters visited the Zhejiang Province District Distribution Center and the Baoshan City Distribution Center in Shanghai of YTO Express Yunda Holding, and found that the volume of express delivery has grown to varying degrees.

"This year, the number of express deliveries at our branch has also increased by more than 40%, with daily volume growing from over 9,000 packages in the same period last year to over 1.3 million now," said Lu Qijun, head of the Baode Road branch of YTO Express Yunda Holding, to a reporter from the Finance and Economics Society.

Of note is that Lu Qijun revealed that, with the support of the "Number One Project", the cost of a single express shipment at his branch has decreased by 0.1 yuan. "Do not underestimate this 0.1 yuan. Over the course of a year, our branch's costs have been reduced by more than 400,000 yuan. The reduction in branch costs allows us to better pass on benefits to customers and strengthen our competitive advantage in the industry."

From an industry perspective, data from the State Post Bureau shows that as of August 13, this year's express business volume in China has exceeded 100 billion packages, reaching the billion-parcel milestone 71 days ahead of 2023.

Some branches are implementing pre-sorting, and the cost reduction effect is significant.

When taking over the Baode Road outlet at the beginning of last year, the outlet was in a state of loss. Subsequently, under the plan of the 'Number One Project,' I returned the original site, moved the equipment into the Baoshan City Distribution Center, immediately saving around 0.5 million yuan, and the outlet also achieved site elimination.

Inside the YTO Baoshan City Distribution Center, the Finances & Economics reporter saw many shelves labeled with the street names of Jing'an District. Next to the large conveyor equipment were small sorting devices. The small sorting devices fall within Lu Qijun's management scope. According to Lu Qijun, in this distribution center, there are approximately four or five outlets 'ascending' here, and they have implemented pre-sorting at the outlets.

According to reporters on-site, under normal circumstances, express deliveries need to be transported from the distribution center to various outlets, and then distributed to various couriers after sorting at the outlets. Outlets managed by Lu Qijun and others directly distribute the parcels needed by couriers after sorting at the distribution center to the couriers. Furthermore, as there is no need to set up secondary sorting at outlets in the city area, rental costs have also been saved.

"By implementing pre-sorting at the outlets, the need for re-sorting at the outlets is reduced, undoubtedly lowering outlet costs and improving courier delivery efficiency by approximately 1-3 hours," said Lu Qijun.

For YTO Express, the reduction in outlet costs and increase in profit will strengthen the stability of outlets, making it difficult for issues such as parcel accumulation due to poor outlet management, affecting the normal circulation of parcels, and running away from outlets. This will also enhance the overall stability of YTO Express and benefit the company's brand development.

In addition, YTO Express is also advancing its digital upgrade. According to YTO Express, compared to last year, the company's investment in technology research and development has increased by 48% year-on-year.

"For outlets, the company's digital platform 'Easy Freight' is open to customers, and its convenient operation can enhance customer experience, providing more favorable conditions for customer acquisition," said Lu Qijun.

It is worth mentioning that YTO Express Group has also introduced the use of unmanned vehicles. Currently, it has deployed nearly 130 unmanned vehicles in more than ten regions including Fujian, Anhui, Gansu, Guangxi, Hunan, Jiangsu, and Zhejiang, with a maximum daily delivery volume of 2,000 packages per vehicle.

After the preliminary testing, in April of this year, YTO Express Group also introduced dozens of intelligent driving heavy-duty trucks, covering multiple transfer centers such as Shanghai, Hangzhou, Wuxi, Jieyang, and Yiwu. Compared with traditional medium-duty trucks, intelligent driving heavy-duty trucks can reduce fuel consumption by 2 liters per kilometer. For example, on the route from the Wuhan hub to the Linhai hub, it can save tens of thousands of yuan in expenses per year (based on the current average price of diesel of 7.6 yuan/liter).

Reducing costs and lowering the price of express delivery.

According to the latest data released by the A-share "Two Deliveries and One Reach" companies, the business volume of the three express delivery companies increased significantly in July, but in terms of single ticket prices, Yunda Holding (002120.SZ) has fallen below 2 yuan, and YTO Express has the highest single ticket price at 2.24 yuan.

In response to this, an industry insider told Cailian Press that with economies of scale, costs have decreased, and naturally, single ticket revenue has also decreased. At the same time, as express delivery companies are more inclined towards small parcels, the weight of single tickets has decreased, and both single ticket revenue and costs will also decrease. The adjustment of product structure is also a reason for the decline in single ticket prices.

In addition, as mentioned by Lu Qijun, the decrease in costs has slightly increased the profit margin of express delivery, and express delivery companies can also strengthen their competitiveness through price advantages. Currently, express delivery companies mainly launch value-added services, and it is expected that the higher cost of value-added services may support prices.

YTO Express Group has also recently introduced value-added services such as "Same City Express" and "Aviation Parcels".

"Nowadays, many customers choose value-added services like 'Yuanzhunda.' Customers will choose corresponding services according to their needs, especially for high-value-added goods, customers tend to enhance their logistics experience." Lu Qijun further stated that currently, both branches and express delivery company headquarters are trying to enhance customer stickiness. The aforementioned digital methods can help branches improve their operational issues and management methods in a timely manner, improve the quality of branch services, and better acquire customers.

Strengthen the "going abroad" supply chain, YTO Express Group accelerates the internationalization process.

Currently, another breakthrough point for express delivery companies is "going abroad", especially in the context of the rapid growth of cross-border e-commerce logistics with the development of platforms like Temu and SHEIN.

According to the reporter from Financial Link, YTO International has launched dozens of routes in response to the needs of cross-border e-commerce, among which the development of routes such as China-Korea, China-Japan, China-Kazakhstan, and China-Australia is growing rapidly.

As of now, YTO Aviation has introduced a total of 19 freighter aircraft, with a wide-body medium-sized fleet mainly consisting of B757 and B767 models. In addition, the company has also introduced its first domestically produced ARJ21 aircraft to fill the capacity gap in YTO Aviation's domestic and short-haul international routes. At the same time, YTO Aviation will continue to expand its fleet size.

At Hangzhou Xiaoshan Airport, YTO Aviation operates two B757 aircraft on the Hangzhou to Moscow route. "Currently, for the company, the Boeing freighters B757 and B767 models are more in line with the company's current needs, and the conversion cost from passenger to freighter is much lower compared to purchasing new aircraft."

In addition, YTO's "Oriental Land Port" global aviation logistics hub located in Jiaxing is expected to be completed in June next year, with a planned capacity of 100 aircraft stands. It is estimated that by 2030, the cargo and mail throughput of Oriental Land Port will reach 1.1 million tons. In terms of construction progress, as of July this year, all 22 structures of the project have been fully initiated, with 10 structures having been completed, covering an area of over 0.4 million square meters, completing nearly 50% of the overall project image.