The coronavirus is pressuring China's logistics industry.
Trailer truck passing on road near rail guard. Image Credit: Seb Creativo/Unsplash
Yimidida, a logistics firm that provides crowd-sourced delivery services in China, has announced the completion of its near-CNY 1 billion (USD 140 million) Series D+ round of funding. The deal came with acquisition of Shanghai-based UC Express.
The firm already raised CNY 1.8 billion (USD 252 million) in a Series D round of funding, led by Boyu Capital, in Jan 2019.
Founded in 2015, Yimidida has established its market position by adopting a unique alliance model in China's LTL (Less-than-Truckload) shipping industry.
The main principle of the winning recipe for the industry is simple: find your company's economies of scale. There are three proven ways of scaling faster and better: self-operation, franchising and a mix of direct operation and franchise.
China's largest LTL trucker Deppon, which went public in 2017, is famous for its self-operation practice and reliable services, a strategy familiar from express giant SF Express. ANE Logistics focuses on a franchise model to expand its footprint; the company landed a USD 300 million Series F round of funding led by Centurium Capital this January. Best Express adopts the third approach.
Yimidida has invented a new business model, an alliance between the firm and with regional LTL couriers, and is gradually building a vast logistics network across the country – with the rest of the world perhaps to follow.
The first one to observe and validate the potential of Yimidida's alliance model was the Singapore-listed Global Logistics Properties (GLP) 's executive Dong Zhonglang, who led the Series A round of funding in 2016. Since then, the company has accumulated more than CNY 3 billion (USD 420 million) in funding to date.
With a glut of capital, Yimidida was able to transform the alliance into an integrated business. Yimidida has conducted several deals to exchange shares with local firms or buy new shares issued by those companies, to take stronger control over its regional members. By doing that, the company successfully expanded its businesses in 31 provinces in 2019, 24 of which are under full control. With 200 fulfillment centers and 12,000 service centers, Yimidida has become one of the top players.
Moreover, the company has realized how the internet, artificial intelligence (AI), data analytics and robotics are already changing how warehouses, distribution centers and delivery systems work since its inception. Its Galaxy system is more than a control tower system, which contains functions like order-client matchmaking, vehicle monitoring business intelligence and so on. Besides, it introduced an essential strategic partner named G7, a fleet management company, to explore opportunities in adopting an intelligent asset, a trailer designed by G7 to reduce loading and unloading time.
The spreading coronavirus is taking a profound toll on industrial production as well as increasing supply chain risks. China's shipping and airline logistics got hit severely as a result. For the domestic trucking industry, enterprises are experiencing a supply-chain shock due to several subsequent government lockdowns. Some Chinese local governments are still trying to prevent lorries from moving around unless they are delivering necessities like food and health protection. Re-designing express routes poses challenges, and the cash flow pressures coming along (especially for small and medium-sized) are making companies rethink management strategies to act fast.