Innovating cross-border logistics

Best Inc targets ASEAN e-commerce as launchpad for worldwide trading

With the Association of Southeast Asian Nations emerging as China's largest trading partner, Best Inc, a Chinese integrated supply chain and logistics solutions provider, will build more service networks in the bloc's member economies.

Earlier this year, the Hangzhou-headquartered company started to operate cross-border services between China and five Southeast Asian markets.

Based in Zhejiang province, Best had completed building service networks in Thailand, Vietnam, Malaysia, Cambodia and Singapore in July, to introduce China's mature logistics operational modes. These are creating jobs, tax revenues and the right conditions for local businesses to develop e-commerce, mobile payment systems and other emerging industries.

By leveraging its asset-light model and experience in Thailand and Vietnam, Best plans to operate 12 sorting centers and around 400 service stations across Malaysia, Cambodia and Singapore over the next three years.

These will include two customized flagship sorting centers in Kuala Lumpur and Phnom Penh that will be equipped with cutting-edge automation equipment like high-speed automatic sorting lines and dimension-weight-scanning systems.

According to a joint research by Google, Temasek and Bain & Company, with 360 million mobile-savvy internet users, Southeast Asia's e-commerce sector is on track to reach $150 billion in sales by 2025 from $38 billion in 2019.

Jonny Chou, the group's founder and chairman, said through vigorous investment, and application of automation equipment and information technology, the company aims to provide its Southeast Asian clients with efficient services. This will help local small and medium-sized enterprises to benefit from smart logistics services, and facilitate the growth of digital economies in these areas.

In addition to building more partnerships with airlines, freight train operators and local partners in both China and ASEAN markets, Best's next steps will innovate cross-border business. They will make cross-border logistics a strong link in international trade under the current global business setting, he said.

To meet the rising demands of the e-commerce sector and evolving customer needs, Best is offering next-day delivery options in major areas of Thailand and same-day deliveries in Ho Chi Minh City and Hanoi in Vietnam. The company's total parcel volume from Southeast Asia reached 16.1 million in the second quarter of this year.

The company is also eyeing opportunities to provide additional services in the region, including supply chain management, freight delivery, and truckload capacity brokerage, with plans to operate in Indonesia and the Philippines in the future.

Chou stressed that multilateral trade is still an irresistible trend. The increasingly close economic and trade relations between ASEAN and China remain vigorous due to multilateralism and free trade deals, such as the upcoming Regional Comprehensive Economic Partnership.

China's trade with ASEAN stood at 2.51 trillion yuan ($367 billion) in the first seven months, growing 6.6 percent year-on-year, accounting for 14.6 percent of its total foreign trade volume, according to data released by the General Administration of Customs.

The expansion in China-ASEAN trade has been partly buoyed by the implementation of an upgraded China-ASEAN Free Trade Area protocol since October 2019, which has further facilitated goods trade and brought dividends to e-commerce businesses on both sides.

"We will promote the construction of logistics channels from China to Southeast Asia, making available sea, land and air transport between the two sides, and provide cross-border e-commerce customers with full-link door-to-door integrated cross-border logistics services," he said.

The company hopes to work with more partners to provide logistics support to Chinese companies so they could "go global" through the deployment of global logistics and supply chain networks. It will also seek to help upstream businesses cultivate reliable logistics service ability.

Earlier this month, the company participated in the 2020 China International Fair for Trade in Services in Beijing as part of its efforts to further expand its global footprint.

Chou said with COVID-related social distancing measures forcing many people into isolation across the world, demand for faster and better deliveries is rising. Since the contagion has been largely under control since April, the company saw its first-half international business volume surge. Its total sales reached 13.88 billion yuan in the first half of this year.

As people in other countries are also under quarantine and still subject to social distancing measures, e-commerce is booming. Demand for faster and better logistical services is high. Many multinationals believe the industry is no longer simply labor-intensive, but a combination of people, technology and innovation, Chou said.

"Going forward, we plan to maintain a balanced growth strategy and strive for profitability by continuing to leverage our technology-enabled integrated supply chain and logistics service model. We will lay emphasis on e-commerce, invest in technology application and automation, and capture revenue and cost synergies across multiple business units," said Chou.

Efficient supply chains are essential to the digital economy and foreign trade. Besides making bigger investments in technology, many logistics companies are expanding their network of warehouses to improve cross-border delivery services, said Cai Jin, vice-president of the China Federation of Logistics and Purchasing.

China's courier sector delivered 60 billion parcels in 2019. The country has over 20,000 companies for express deliveries, employing more than 3 million people, according to the State Post Bureau.

Supported by more than 8,000 employees, the New York Stock Exchange-listed Best's business currently covers express and freight delivery, supply chain management, business-to-store-to-consumer supply chain, truckload capacity brokerage, international logistics and financial services. It had business units in around 20 countries and regions such as the United States, Germany and Japan by the end of 2019.

Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, said it is time for China to highlight the roles of processing trade and cross-border e-commerce businesses to ease the pressure on general trade, which refers to imports or exports of goods. It is equally important to further tap the consumption potential in the domestic market to help Chinese exporters seek new growth points.

Processing trade refers to the business activity of importing all, or part of, the raw and auxiliary materials from abroad, and re-exporting the post-processing/assembly finished products.

Wei said both exporters and the government need to intensify information exchange with the country's long-term trading partners and maintain China's vital position in the global industrial chain. Chinese logistic service providers must pay close attention to the pandemic situation in their overseas markets, and prevent risks caused by protectionism.

To maintain solid economic fundamentals, the government has also emphasized the importance of focusing on the six priorities of safeguarding employment, people's livelihoods, the development of market entities, food and energy security, the stable operation of industrial and supply chains and the smooth functioning of society.