A recent study has reported more than 1.7x revenue expansion for China last mile delivery market between 2022 and 2025. The approximately US$71 Bn market of last mile delivery in China gains majorly from the exploding online food delivery industry, as well as the unprecedented expanse of eCommerce as a whole. By the end of 2025, the Chinese last mile delivery market will reach beyond US$123.6 Bn.
These estimations are sourced from a recently released report of Fairfield Market Research that has referred to China as a globally significant market, and the leading participant of Asia Pacific’s highly lucrative logistics and delivery domain.
The Chinese eCommerce Faces Unique Challenges than Others
China houses the world’s largest eCommerce industry that is more than half the global eCommerce, and naturally provides the strongest breeding ground for delivery service providers. The country however poses a set of altogether different challenges in front of delivery, especially last mile delivery companies. The extremely congested, skyscraping localities across the urban neighborhoods represent a functionally difficult scenario facing delivery providers.
While delivery services have become the most critical part of online purchases worldwide, the significance of last mile in China has grown more intensely following the breakneck competition between Alibaba, and JD.com. The immense popularity of same-day deliveries drives this competition as the speed of deliveries directly measures their success. Following the suit, businesses are now emphasizing pushing logistics automation, drone deliveries, and electric vehicles.
With an accelerating economy, and greater acceptance of the tech-driven transformation of the logistics and delivery trends, China envisions to become the worldwide leader in last mile delivery solutions in the upcoming years.
The Same Day Delivery Providers Are Clear Winners in China
Presently, regular delivery contributes around US$30 Bn to China’s last mile delivery market. Fast/same day has already outperformed the regular counterpart and the trend will prevail in the foreseeable future. Today, nearly 70% of all the packages delivered the same day across China. The report predicts fast/same day delivery segment at an estimated CAGR of over 20% by 2025.
Besides leaders like DHL, and China Post, China’s top players in the same day delivery include YTO Express, STO Express, and Yunda Express.
Last Mile Delivery Market Snapshot Shows Dominance of FMCG
Demand from FMCG currently contributes around US$25 Bn revenue to the country’s last mile delivery market and will see over 20% growth by 2025-end. The FMCG sector has been at the forefront and soared dramatically high since the onset of 2020 pandemic situation. Following this, the pharma and healthcare segment brings in sizeable revenue, further followed by the technology products category.
Following this, the pharma and healthcare segment brings in sizeable revenue, further followed by the technology products category. The unprecedented growth of ePharmacy has brought about the flourishing outlook of last mile providers in the pharma and healthcare segment. On the other hand, shooting sales of consumer electronic products will account for the expansion of the logistics and delivery sector as well.
Demand for Final Mile Deliveries Will Ascend in Food and Beverages Industry
Given the prime position of China in the world’s technology products industry, the report gives a clear picture that the country’s last mile delivery market will also witness an upsurge on the back of the soaring tech products market. The food and beverages industry in China is however set to reflect the highest demand generation potential for final mile delivery providers. Consumption of last mile delivery services across China’s F&B sector is likely to see robust growth of 20.7% through the end of 2025.
Last Mile Companies Will Penetrate Deeper in the Liquid Goods Category
Based on the cargo type, dry goods continue to surge ahead. A majority of goods ordered online are in dry form irrespective of the industry they come from, i.e., FMCG, pharma, and high-tech products. Dry goods will thus remain dominant.
The report however identifies strong growth indications in the liquid goods segment despite the existing regulatory and functional restrictions on liquid goods transportation that have accounted for the skewed growth of the segment so far. Advent of transportation facilities such as sealed containers, and reefer trucks will uplift the prospects of last mile delivery companies in China’s liquid goods segment.
Delivery Drones Take off in China’s Last Mile (Food) Delivery Space
Light commercial vehicles continue to be the preferred choice of vehicle among delivery companies. LCVs currently lead the Chinese last mile delivery space but the futuristic scenario looks starkly different as drone delivery is faster capturing the interest of the entire logistics and delivery sector, of late.
Although in its infancy, drone delivery holds immense potential to change the dynamics of final mile across the country’s eCommerce and logistics landscape in the next few years. Toward the end of 2025, Fairfield Market Research projects more than 25% growth in demand for drone delivery in the last mile delivery market.
China’s leading food delivery platform, Meituan has been working on drone delivery technology since 2017 and is successfully leading food delivery by drones amid highly challenging, densely populated urban areas of the country. The company is strategizing on pick-up-at-kiosks delivery model rather than the regular doorstep delivery model.
While rural or distant location deliveries have increased manifold in China over the recent past, delivery drones are being increasingly perceived as the most viable, seamless, futuristic solution to cater to rising need. Adoption of delivery drones has taken flight in China’s food delivery sector and will continue to ascend in the upcoming years.