Express firm is one of four major Chinese logistics companies investing US$495m to upgrade key e-commerce logistics last-mile delivery business.
Fast-growing Chinese express delivery company ZTO Express is investing around US$168 million to acquire a roughly 15% stake in Cainiao Post, Cainiao Network’s network of last-mile delivery stations.
ZTO said it was making the investment in Cainiao Post “in order to jointly ramp up last-mile service capabilities and provide diversified solutions that enhance efficiency and meet the growing demand from new retail”.
The company said its strategic investment in Cainiao Post was being made in conjunction with four other leading express delivery companies in China, namely: YTO Express, STO Express, Yunda Express, and Best Inc., with a total investment of approximately US$495 million.
The move is just the latest major development within China’s rapidly evolving e-commerce logistics market and the role within this market of Alibaba-owned logistics operator Cainiao Network. Only last month, Alibaba and its logistics arm Cainiao Network announced a strategic agreement in which investors led by Alibaba and Cainiao will invest US$1.38 billion in ZTO in exchange for an approximately 10% equity stake in the company.
Meisong Lai, founder, chairman and CEO of ZTO, said: “ZTO has made significant progress over the past few years in developing its last-mile delivery products and services. We have always had a deep relationship with Cainiao, which is empowering express delivery companies and growing alongside such companies.
“This investment by ZTO in conjunction with other major express delivery companies in Cainiao Post will allow us to offer better services to customers by enhancing resource allocation and strengthening cooperation across our collective last-mile delivery networks.”
The company said last-mile delivery services were becoming increasingly competitive as customers’ demands for personalised pickup and delivery services grows, alongside the number of daily parcel volume. Cainiao Post offers customers a wide variety of services, including scheduled deliveries, smart lockers, and delivery outlet pickups.
ZTO operates a “highly scalable” network partner model, which the company believes is best suited to support the significant growth of e-commerce in China. The company uses its network partners to provide pickup and last-mile delivery services, “while controlling the mission-critical line-haul transportation and sorting network within the express delivery service value chain”.