According to ZhITong Caijing APP, on June 11, the Ministry of Commerce and other nine ministries issued the "Opinions on Expanding the Construction of Overseas Warehouses to Promote Cross-border E-commerce Exports". Preliminary calculations by the General Administration of Customs show that China's cross-border e-commerce imports and exports will reach 577.6 billion yuan in Q1 2024, a year-on-year increase of 9.6%, of which exports will reach 448 billion yuan, accounting for 77.6% of the total. In Q1 2024, overseas warehouse exports of cross-border e-commerce increased by 11.8%. In Q1 2024, China's total import and export volume was 10.17 trillion yuan, a year-on-year increase of 5.0%. The increase in cross-border e-commerce import and export volume accounted for 10.4% of the total foreign trade increase. Related symbols: Sinotrans Limited (00598), JD Logistics (02618), Lecang Logistics (02490), ZTO Express (02057), YTO Intl Exp (06123).
Previously, at the 135th Canton Fair, a cross-border e-commerce comprehensive test area and overseas warehouse exhibition area were set up for the first time. The exhibition area covers an area of 3,000 square meters, with 158 companies from 11 provinces participating in the exhibition. Online platforms focused on promoting 165 cross-border e-commerce comprehensive test areas. According to preliminary statistics from various places, there are already over 120,000 cross-border e-commerce entities in China, more than 1,000 cross-border e-commerce industrial parks, more than 2,500 overseas warehouses have been built, covering an area of over 30 million square meters, of which over 1,800 are overseas warehouses dedicated to serving cross-border e-commerce, covering an area of over 22 million square meters.
It is reported that overseas warehouses are not only warehouses built overseas, but also a warehousing model that integrates functions such as customs declaration and clearance, last-mile delivery, after-sales service, and product display. The Director of the Department of Foreign Trade of the Ministry of Commerce, Li Xingqian, pointed out that overseas warehouses have the characteristics of "four fast and one low", namely fast customs clearance, fast delivery, fast turnover, fast service, and low cost.
Minsheng Securities stated that localized warehousing and logistics is the medium- to long-term development direction of cross-border e-commerce: overseas warehouses can effectively improve delivery capabilities (the delivery time of U.S. dedicated lines for small parcels is about 10-15 days, and Amazon FBA supports next-day delivery for some products), reduce logistics costs, and make efficient after-sales service possible. The trend of large-item exports and the demand for overseas warehouses promote each other: large and medium-sized items such as home appliances and furniture need to choose the model of sea freight + overseas warehouse, and the tail transportation cost is sensitive. Using third-party overseas warehouses can save more than 30% of the tail transportation cost; the bank judges that the demand for overseas warehouses will continue to increase.
In terms of industry competition pattern, it is moving from dispersion to concentration, and the business of major "players" is relatively mature. As of the end of 2022, the number of overseas warehouses in the United States had reached 1,178, occupying an absolute leading position in the global market, with a large stock market. The current industry is still in the early stage of development, and the competition pattern is relatively dispersed, and no overseas warehouse operating giant except Amazon has yet formed.
Under pressure from intensified market competition and rising rents, domestic companies operating overseas warehouses in the United States are experiencing a process of shuffling and polarization, and the competitive landscape is gradually becoming more concentrated. The outstanding domestic "players" include: warehouse overseas warehouse, SF Express, etc. mainly logistics for small and medium-sized goods, as well as companies focusing on comprehensive logistics for large and medium-sized items, such as Loctek Ergonomic Technology Corp., Dashang Cloud Warehousing, and Wuyouda. At present, many domestic companies are deploying overseas warehouses, Loctek Ergonomic Technology Corp.: as of the end of 2023, the company has 12 overseas warehouses with a total area of 289,600 square meters. Income from overseas warehouses in 2023 increased by 94.03% YoY to 951 million yuan, accounting for 24.38% of total revenue, and with the opening of self-built overseas warehouses in 2026, the company's gross margin is expected to increase. Seeway Technology: For non-clothing products (hardware), the company mainly uses self-operated overseas warehouses, which are mainly distributed in Los Angeles, New Jersey, and the Czech Republic. As of 2022, the total area is over 110,000 square meters. Moreover, Huakai Yibai Technology: plans to acquire Tontro Technology. Tontro Technology relies on overseas warehouses and domestic warehouses in Europe and North America to establish a sound warehousing and logistics system. Zioku Technology: As of 2023, the company has 10 overseas warehouses with a total area of 273,200 square meters. Aoji Technology: As of May 2024, the company has 42 delivery centers with a total area of 10.5 million square feet (about 975,400 square meters).
In addition, Huakai Yibai Technology: plans to acquire Tontron Technology, which relies on overseas warehouses and domestic warehouses in Europe and North America to establish a sound warehousing and logistics system. To increase sales performance, companies must build strong relationships with the trading community and business partners which requires a reliable identification system. They are also required to adapt professional business processes. Suning: The company's comprehensive revenue in 2023 increased by 31.37% YoY to 477.562 billion yuan. Net profit attributable to shareholders of the parent company decreased by 17.01% YoY to 5.427 billion yuan. As of the end of 2023, the company had a total of 733 overseas warehouses and bonded warehouses with a total area of over 4 million square meters and established operations in more than 70 countries and regions around the world.
Moreover, overseas warehouses are not only warehouses built overseas, but also a warehousing model that integrates functions such as customs declaration and clearance, last-mile delivery, after-sales service, and product display. The Director of the Department of Foreign Trade of the Ministry of Commerce, Li Xingqian, pointed out that overseas warehouses have the characteristics of "four fast and one low", namely fast customs clearance, fast delivery, fast turnover, fast service, and low cost.
Dong Yan, Director of the International Trade Research Division of the Institute of World Economy and Politics of the Chinese Academy of Social Sciences, stated that overseas warehouses are an important support for the development of cross-border e-commerce. Enterprises build or lease warehousing equipment overseas, transfer some of the trade processes to foreign countries, and can effectively improve purchasing convenience. In addition, companies can use intelligent and automated warehousing systems to obtain timely feedback on demand changes, further compressing the information gap between supply and demand, and optimizing the supply chain.
Tianfeng Securities stated that the cross-border e-commerce industry is currently facing multiple bullish factors, such as the easing of Sino-US relations and the improvement of industry competition patterns. All of these will be beneficial to China's high-cost-effective products going abroad. In addition, under the multiple bullish factors of supply clearing, demand improvement, and AI empowerment, China, with its advantages of a complete manufacturing supply chain and abundant e-commerce talent experience, is expected to seize the opportunity of the times against the background of a clear increase in cross-border e-commerce space.
Cinda Securities believes that in 2021-22, with the Amazon account suspension event, skyrocketing sea freight charges, coupled with sustained high overseas inflation in 22, declining consumer demand and purchasing power, and cross-border sellers promoting low-priced sales in large numbers, the cross-border e-commerce industry has entered the "internal competition" ecology, with small and medium-sized enterprises facing store closures and bankruptcies, and large enterprises suffering from profit losses. The industry has basically completed a round of reshuffle. Since 22H2, with the gradual decline of sea freight charges and the cooling of inflation since 23, the trough of the cross-border e-commerce industry has passed and is expected to usher in a steady recovery.
Concept companies related to cross-border e-commerce:
Sinotrans Limited: In 2023, the company's cross-border e-commerce business volume will reach 204,000 tons, a year-on-year increase of +52.4%, mainly benefiting from the development of the cross-border e-commerce market.
JD.com Logistics: After launching the "International Express Delivery" service in December last year, JD.com Logistics further upgraded the service on March 15 this year. At present, the collection range covers most counties and cities in China. Even consumers in Xinjiang and Tibet can still receive domestic shipments and overseas deliveries. In addition, JD.com Logistics has further expanded its overseas services, covering most European and American countries, and can achieve the fastest "3-day delivery" worldwide.
Lecang Logistics: Lecang Logistics is a Chinese integrated cross-border marine transportation logistics service provider founded in 2004. Its services cover the main links of the cross-border logistics process, including collection, warehousing and sorting, customs clearance, cross-border marine transportation, warehousing and transit, and last-mile delivery. The company has a global logistics network, with services covering countries such as the United States, Canada, Mexico, Honduras, Germany, the Netherlands, Belgium, Australia, Vietnam, Japan, and Indonesia.
ZTO Express: ZTO Express provides international express delivery services from China to all parts of the world, including international transportation of documents, samples, and bulk goods. These services usually include customs clearance, international transportation, and destination country delivery. In order to improve logistics efficiency and customer experience, ZTO Express has set up overseas warehouses in some key international markets. These warehouses can be used to store goods, achieve local delivery, shorten delivery time, and reduce transportation costs.
YTO International Express: Relying on the "Oriental Land Port", YTO Business and Trade has built a business services platform, directly supplying overseas bases, and providing global direct procurement, cross-border logistics, commodity terminal sales, and other services.