E-commerce is growing at a fast rate in China, especially in rural areas. It’s estimated that of the more $240 billion of all online sales generated in the country in 2017, more than 17% came from the countryside.
Mordor Intelligence’s report, China: Last Mile Delivery Market, claims that online retail sales in the country increased by 32% from $105 billion to $139 billion in 2016. Of China’s 772 million internet users, 27% are based in rural communities.
The issue that arises is how to deliver the last mile to these remote and often mountainous regions, which account for almost two-thirds of the country with a population of 590 million?
One way is by a pilot program that is testing a shuttle robot that travels a 15 kilometer cable rail or “air expressway” in the town of Xin’an.
The robot carries 100 kg of goods and parcels and delivers them to destinations quickly, cheaply, and with more fuel efficiency than traditional modes.
According to Life of Guangzhou, it takes up to six days to deliver an express parcel in rural areas, but with the new expressway it should take one day or less.
The system is also expected to reduce fees. Mordor Intelligence reports a last mile delivery by artificial intelligence can cost 29-cents per delivery compared to $1.36 if delivered by a human.
A further 50% reduction in delivery costs can be seen if deliveries are done by drones.
“Currently, traditional express companies will still dominate the cross-city delivery business, and our company will target the last-mile distribution business upon the delivery’s arrival.
“I think it’s very natural that we will achieve more collaboration with other express companies, because we actually help them reduce delivery costs,” said Ma Yasheng, chairman of iBosst, the company that developed the Xin’an expressway.
Ma told Life of Guangzhou that he’s confident that an intelligent logistics express system that covers towns and villages nationwide will become a reality one day, adding he hopes such a system will start establishing itself within 10 years.
In March 2018, SF Express, one of the largest courier companies in China, was granted the first domestic drone operator license in the country.
The licence allows the logistics company to access 30% of China’s air space (the remainder is militarized).
In partnership with SF Express, commerce giant JD.com has built a 40 drone delivery network covering 100 villages.
Its fastest drone can fly up to 100 km/h with a range of 100 km. Since March 2016, the company’s drones have clocked more than 5,000 hours of flight time.
JD.com is currently developing drones that can carry five tonnes of product.