China's express delivery service gets overheat

I found out about this personally when I bought some cat food online.  Usually, the delivery boy will come the next day after my order.  But, this time, the pet shop owner said there was no longer any express delivery.   Just to make sure my cats do not starve to dead, he came the next day himself bringing me my cat supply.  Beside of thanking Mr. pet shop owner, I would also like to talk about China’s express delivery service.  It clearly overheats.

Due to the popularity of online shopping,  demand for express delivery service in China has outstripped supply.  In 2009, total transaction volume of online shopping in China was RMB258.6 billion.  By 2010, it was over RMB500 billion, increasing 100%.

As of express delivery service, the total number of packages delivered in 2009 was 1.86 billion. It increased to 2.4 billion in 2010, up 30%.  This is 3 times more than China’s GDP growth.  Still it is not enough to meet the demand.    Since the second half of this year, many orders were delayed because of not enough capacity to handle the packages.

The coming Chinese New Year has made the situation even worse.  As  people (including those working in the express delivery services) traditionally take long holidays during the festival, there are simply not enough hands to handle the packages.  Many express delivery services have already stopped taking new orders.  Here is an article about it in the local media:  http://tech.sina.com.cn/i/2011-01-24/08105124183.shtml

Thing will get better after the holiday.  But in long runs, costs for express delivery services  will definitely increase and that will put pressure on all the online retailers.  Not good companies like Dangdang, 360buy, Vancl, and all the small shops on Taobao.