In recent years, the express delivery sector has undergone dramatic changes, with competition intensifying significantly following the rapid rise of J&T Express. An undeniable fact is that the industry's boom is closely tied to the growth of e-commerce. Statistics show that since the COVID-19 outbreak in 2020, global e-commerce transactions have surged, leading to explosive growth in parcel delivery services. This development has profoundly reshaped market dynamics and forced a re-examination of industry relationships.
Data from September 2023 indicates that parcel volume growth in the express delivery industry has exceeded 40%, driven primarily by increasing e-commerce penetration. Delivery companies have been investing heavily to expand logistics networks, improve infrastructure, and implement advanced automation equipment, aiming to reduce per-unit costs through economies of scale. However, beneath this surface prosperity lies concerns about the sustainability of current business models.
Traditional Giants Playing Catch-Up
The express delivery market was traditionally dominated by established players like SF Express, YTO Express, STO Express, and ZTO Express, which leveraged their extensive networks and market advantages. However, J&T Express's explosive growth since 2020 has disrupted this balance. Through flexible financing strategies and aggressive pricing, J&T quickly captured market share, forcing incumbents to rethink their strategies.
The new competitor's rapid expansion has not only attracted numerous customers but also put tremendous pressure on traditional players. In response, companies like SF Express and YTO have significantly increased capital expenditures to improve operational efficiency while engaging in price competition. This uncontrolled price war has severely squeezed profit margins across the industry.
The Prisoner's Dilemma of Price Wars
In this hypercompetitive environment, industry players face a classic "prisoner's dilemma." While each participant hopes to gain customers by lowering prices, when all competitors adopt this approach, the result is compressed costs and profits for everyone.
Traditional companies have been forced to adopt cost leadership strategies focused on optimizing transportation and delivery expenses. However, this approach faces significant challenges, particularly as efficiency gains from AI and big data technologies reach their limits, making competition even more intense.
External pressures compound these challenges. As competition intensifies, new entrants continue to emerge, creating an increasingly complex market landscape. Unlike the global container shipping industry, which has consolidated to just nine major operators, the express delivery sector continues to attract new players, highlighting its growth potential and market opportunities.
Industry Self-Reflection
After several rounds of price wars, companies are recognizing that price competition alone cannot ensure sustainable success. Many are now focusing on service quality as a key differentiator in the next phase of competition.
This shift represents more than just survival tactics—it's a fundamental transformation to adapt to new economic realities. Market participants must evolve from competing on "quantity" to competing on "quality," avoiding homogenization while making service levels and user experience key decision factors for consumers.
Path to Collaborative Success
From a game theory perspective, the industry needs to move beyond short-term cost competition toward long-term cooperation and mutual benefit. Once services become sufficiently differentiated, the futility of price wars will become apparent, allowing competitors to compete on service quality rather than just price.
In this transition, leading companies can strengthen their market position by building powerful brands and implementing loyalty strategies. By developing more efficient supply chains and logistics systems, they can deliver superior service that justifies premium pricing.
Future Outlook
The industry will inevitably undergo consolidation and restructuring. J&T's disruptive entry has forced traditional players to rethink their strategies. After the current price war phase, as consumers increasingly prioritize service quality, companies must balance cost efficiency with service innovation to ensure healthy development.
Technological advancements in big data and AI will inject new vitality into the sector. Companies should leverage these tools to improve efficiency, reduce labor costs, and rebuild value chains. The future express delivery industry will incorporate more intelligent and personalized elements, creating enhanced user experiences.
Conclusion
The express delivery industry is undergoing unprecedented changes due to J&T's market disruption, presenting traditional players with unprecedented challenges. To succeed in this new environment, participants must move beyond price competition toward collaboration and service innovation. Developing rational industry standards and differentiated services will be crucial for sustainable growth. Through this transformation, the industry can emerge stronger, entering a new era of rational competition.
