Logistics giants are making efforts in overseas markets to safeguard cross-border shipping

In 2022, Chinese logistics giants such as SF Express, Jitu, JD.com, and Cainiao all demonstrated their respective abilities when exploring overseas logistics markets. To safeguard the cross-border shipping of Made in China, traditional logistics giants and newcomers in Europe and America have never stopped laying out cross-border shipping business. From a practical perspective, we have found that in the overseas market, we need to face a new supply-demand relationship. Both foreign and our own old experiences often fail, so the solutions presented by each company have different focuses.

1. Heavy asset model
In the past two years, it is believed that as long as a company plays with the heavy asset model, it must be a good model and can establish the best performance system for consumers, such as SF Express's domestic self built aviation fleet, JD Cainiao's large number of self built overseas warehouses, and Jitu's overseas express delivery network layout.
SF Express currently has a particularly thin profit margin and requires a large amount of capital investment to buy aircraft. As a result, its development speed will be limited, especially in the current capital cold winter. Relying on completely self built to compete with international giants such as UPS, it is difficult to establish an advantage in the short term.
JD.com still focuses on warehouse distribution. According to JD Logistics' 2022 semi annual report, as of June 30, 2022, JD Logistics operates nearly 90 bonded warehouses, direct mail, and overseas warehouses, with a total management area of nearly 900000 square meters. At present, JD's logistics business in offshore areas mainly follows its own e-commerce business, where the business goes and where the supporting logistics services go. However, the core issue here is that if JD International's business demand cannot keep up, the supporting logistics will be affected.
From 2015 to 2017, Jitu achieved the second place in Southeast Asia in two years, proving through practice what it means to rely on strength. With the power of OPPO, it caught up with the rise of e-commerce in Southeast Asia. Returning to China to hand in homework is even more so, with a market share of 8% in China within a year and a half. Still relying on their own efforts, OPPO's distributors are still supporting Jitu, and Pinduoduo has also provided the greatest help in business flow, and then leveraged the power of capital to the greatest extent. After Jitu returned to China, it completed a financing of 4.55 billion US dollars in 2021, quickly occupying a market position through burning money to subsidize franchises. The most interesting thing that happened in this process is that Jitu borrowed chicken to lay eggs, The franchisor who used the Three Links and One Da franchise started a business, so there was a situation where the Three Links and One Da franchise banned Jitu. Obviously, there are not many opportunities left by the market for Jitu to leverage its strength.

2. Light and heavy combination mode
From a genetic perspective, Cainiao should have been a very light model company, using a standard digital model to connect with express delivery companies and help them improve efficiency; However, in later practice, Cainiao found that simple digital efficiency improvement was not enough, so he began to venture into warehousing, routes, and distribution, and the model shifted from virtual to real. From the current global business layout of Cainiao, it adopts a combination of light and heavy assets model. As CEO Wan Lin of Cainiao pointed out at a recent internet conference, Cainiao's internationalization strategy adopts a combination of infrastructure "hard connectivity" and digital intelligence construction "soft connectivity". On the one hand, promoting global logistics connectivity through the construction of logistics facilities, and on the other hand, improving global logistics efficiency through the promotion of digital technology. In terms of heavy assets, we focus on our own overseas infrastructure construction, which is known as "hard connectivity". "Points" include eHub, bonded warehouses, distribution centers, overseas warehouses, and self pickup points for overseas countries. "Line" refers to global trunk lines, and "surface" refers to international terminals, continuously increasing overseas logistics infrastructure. At present, the combination of light and heavy collaboration, as well as a combination of software and hardware, can help significantly reduce trial and error costs in overseas markets. By adopting a cooperative model first, we can determine the maturity of the market and then increase investment to ensure the quality of performance. This fully conforms to the principle of minimum executable procedures in "lean entrepreneurship". However, the light and heavy combination model of novices also faces challenges. Firstly, how to ensure the early performance of the light asset model? Especially when facing consumers at the end, if the service quality is not improved, it is easy to damage the reputation. Secondly, how to balance the relationship and coordination between self operation and partners, and which routes or regions need to be re invested in self operation, and which routes can directly choose to cooperate with partners, the considerations behind this require a lot of practical experience.

3. Light asset model
The phrase 'Feixie Bo, allowing everyone to easily participate in global trade' has been prominently placed on the official website of Flexport Feixie Bo. For non industry professionals, this sentence provides a good explanation of what Flexport Feixie Bo does. Although visualization applications have become more mature in the domestic logistics market, in the international freight market, transportation, storage, and trading capabilities are still very dispersed due to longer chains and complex environments. Traditionally, the transportation of a batch of goods may require the participation of up to 20 companies, each with its own systems and processes, and the transmission of information between them is highly dependent on manual labor. Flexport Feixie Bo is committed to creating an intelligent and efficient global trade platform solution. By connecting everyone in the supply chain, we integrate booking, customs declaration, invoice, communication, goods tracking, document archiving, and data analysis into the same system, providing customers with comprehensive freight forwarding services in logistics, trade, warehousing, finance, etc., simplifying global trade processes and improving efficiency. Customers can track the freight situation and analyze various information such as landing costs, container utilization, and cargo inventory through the Flexport Feixie Bo visualization system. According to a survey conducted in 2020 on over 200 existing customers of Flexport Feixie Bo, by using the company's system, customers can save an average of 4 hours per week. In 2021, Flexport, without aircraft or ships, transported nearly $19 billion worth of goods to over 10000 companies in 112 countries and regions worldwide. Under the pandemic, Flexport's revenue increased by 154% in 2021, with sales reaching $3.3 billion. The broad prospects of digital logistics have attracted a large amount of capital to enter. In recent years, the total financing amount of Flexport Feixie Bo has reached 2.3 billion US dollars. The latest round was in February of this year, when the company received an E-round financing of $935 million, and its post investment valuation immediately reached $8 billion. This round of financing will support the expansion of Flexport Feixie Bo in new regions and markets, by investing in emerging enterprises in their respective fields and collaborating with them, thereby promoting the development of the logistics technology ecosystem. At the same time, going public is also an important step in the company's future development plan.

In summary, technology driven logistics will effectively reduce costs, shorten information communication time, and efficiently solve various logistics pain points. So, which model is the future of logistics enterprises? We will wait and see.