2023 Cross-border Logistics Second Half, what should we do?

What to do for 2023 Cross-border Logistics in the second half?

In the short term, the volume of goods is decreasing, price competition is fierce, and costs are rigidly rising. Looking to the future, various aspects such as macro environment, platform, and supply chain are undergoing unprecedented changes.

The “2023 China Cross-border E-commerce Logistics Industry Blue Book” is officially released. Through various methods such as data from the “Xiaosheng Ranking” and cooperation platform data, enterprise research, and expert interviews, we sort out market facts, comb industry patterns, and judge development trends to help everyone clarify their thoughts and open up the situation in the complex situation.

At the same time, we hope to use high-quality content and years of industry precipitation to provide more in-depth services to a wider range of people who focus on the cross-border track. On the occasion of the release of the 2023 Blue Book, we also launched the “Xiaosheng Private Meeting · 2023 China Cross-border Logistics Blue Book Special Session”, which uses the book as a medium to gather industry elite contacts and let the industry’s true insights collide face-to-face, sparking more opportunities. (For details of the private meeting, please see the poster at the end of the article) The following is a partial content sharing of the “2023 China Cross-border E-commerce Logistics Industry Blue Book”, which we hope can bring you inspiration: 1

Grasp market trends through core industry data

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In 2022, the top ten countries in terms of parcel volume sent from China were the United States, Japan, the United Kingdom, Germany, Canada, France, Russia, Australia, Brazil, and Spain.

Data: 17TRACK, General Administration of Customs, Xiaosheng Research Institute compilation and mapping

From 2020 to 2022, the share of parcel volume sent by China to the top ten countries with the highest parcel volume continued to increase, rising from 75.55% in 2020 to 77.84% in 2022. Among them, Japan showed the most significant growth, rising from 7th place (3.47%) in 2020 to 2nd place (6.79%) in 2022. Brazil, which replaced Italy in the ChinaSendTOP10 countries in 2021, has shown a growth trend for two consecutive years. France and Spain’s share continued to decline.

Combined with the year-on-year data of China’s export value of foreign trade goods, several countries that currently rank lower in the ChinaSendTOP10 countries (such as Russia, Australia, Brazil, etc.) have shown a more obvious growth trend. 2

Insight into the industry structure through “Xiaosheng Ranking”

Overall, small parcel lines as a strong business sector almost dominate the cross-border e-commerce logistics market share, with a revenue share of nearly 60% among the top ten companies.

Europe and the United States as strong regional markets account for about 80% of the global cross-border e-commerce logistics market share, with a revenue share of 85.14% among the top ten companies.

2023 Xiaosheng Ranking Core Data

Source: Xiaosheng Research Institute

The top ten companies as the industry’s leading forces continue to maintain double-digit growth overall. The leading enterprises have continuously centralized their scale, having obvious competitive barriers and development advantages in the areas of small parcel lines, overseas warehouses, and the large European and American markets.

Fengyun Enterprise is the backbone of the industry, with an average unit scale of over 1 billion and unclear differentiation, it still has many development opportunities. Among them, FBA logistics is the strongest format in Fengyun Enterprise, accounting for 46.66% of the overall revenue of Fengyun Enterprise, but it has a high dependence on the European and American markets, and its flexibility in format and market expansion is relatively limited. The small package dedicated line enterprise is relatively advanced in the comprehensive process of the format, with relatively low dependence on the European and American markets and a large space for diversified markets, which is more explosive as a whole. The overseas warehouse enterprise is still in the stage of deep cultivation of the European and American markets, with great uncertainty and development space. 3

Through industry and enterprise research, we can have early insight and layout

In 2022, 44.64% of cross-border logistics enterprises have more warehouses in North America, followed by Europe, Japan and South Korea, Africa, and Latin America, and the proportion of cross-border logistics enterprises building more warehouses in other regions is less than 10%. The regions with larger single warehouse areas are mainly distributed in North America, Southeast Asia, and Australia.

In 2022, new warehouses will be built by enterprises in Europe, Japan and South Korea, Southeast Asia, Latin America, Australia, and Africa. Latin America has the highest proportion of newly built warehouse enterprises. Currently, the proportion of cross-border logistics enterprises planning to build warehouses in Europe and Japan is the highest.

Data source: Xiaosheng Ranking preliminary research, Xiaosheng Research Institute compilation and charting

Compared with the survey results in 2021, the proportion of enterprises building new warehouses in Europe and America has fallen in 2022, and the proportion of enterprises with more warehouses and larger single warehouse areas in Japan and South Korea has also declined significantly. Meanwhile, the proportion of enterprises with more warehouses and larger single warehouse areas in Southeast Asia and Latin America has significantly increased.

At the beginning of 2022, more enterprises plan to build warehouses in Latin America, Southeast Asia, and Australia. Currently (Q1 of 2023 survey), the proportion of enterprises planning to build warehouses in Japan, Korea and Europe has significantly increased, and some enterprises also plan to build warehouses in the Middle East and Africa. 4

Grasp the industry’s evolution opportunities from a macro perspective of industry leaders

The destocking trend in the US retail industry has gradually come to an end. Large retailers face cash shortages and adopt conservative purchasing strategies. The market will generally show a mild rebound in the future.

With high-quality Chinese forces such as SHEIN, TEMU, and TIKTOK going global, logistics evolution demands in different directions will be driven: platform centralized procurement will increase the concentration of cross-border e-commerce logistics industry, brand merchants going global through all channels require logistics services to shift from simple transportation services to contract logistics and supply chain solutions, and small and medium-sized sellers are gradually moving closer to the supply chain side due to platform competition. Logistics also needs to operate according to the supply chain thinking, and “fast and cheap” that was only achievable in theory in the past will become something that logistics companies must achieve in the future.

Chinese supply chain e-commerce platform promotes the upgrading of supply chain competition.

Image source: Zongteng Group.

At the same time, with the decoupling of Sino-US trade, the transformation of China’s foreign trade, and the superimposed geopolitical disturbances, regional supply chains will have a deeper impact on logistics: end-to-end demand promotes the integration of 2B and 2C logistics, the requirement for inventory of a pallet of goods will be increased; the demand for overseas local logistics networks will also increase, and the migration of the core areas of the supply chain will also have a significant impact on the distribution and infrastructure needs of the entire logistics industry; trunk intercontinental and regional networks will also undergo many changes, such as the growth rate of China’s semi-finished goods to Southeast Asia, which is much larger than the growth rate of China’s finished goods to the United States, indicating many opportunities. In the short term, as the volume of goods decreases, price competition intensifies, and costs rise rigidly, cross-border logistics faces major challenges; looking to the future, macro environment, platform end, supply chain end, and other aspects are undergoing unprecedented changes, adding more uncertainty to the development of cross-border logistics. Only by understanding the essence of the industry and keeping up with market trends can we stand at the forefront of the industry in the face of the stormy waves of opportunities and traps.

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