On December 15, global consulting firm McKinsey & Company released an analysis of China’s full truckload (FTL) freight market. One of the main points from the report was just how greatly digitalized platforms have disrupted China’s FTL trucking market, and how the degree of competition in the sector is set to grow increasingly fierce in the future as new digital models continue to emerge.

FOR-U

FOR-U

In a broad sense, trucking includes express delivery, regional less than load (LTL), full truckload (FTL) and last mile delivery. Among these shipping modes, FTL shipping is dominant, making up more than 50 percent of all shipments, and is worth RMB 3 trillion, which is then followed by LTL and last mile delivery, worth RMB 1 trillion each, followed by express delivery land freight, with a market share worth RMB 0.6 trillion.

FOR-U

FOR-U

In a narrower sense, trucking mostly consists of LTL and FTL shipments. As a flexible and convenient mode of freight transport, trucking has developed rapidly in China, and will only continue to do so. With China's uninterrupted GDP growth, the size of China’s FTL and LTL market reached $580 billion in 2019, far exceeding that of other countries and regions, including the US ($480 billion) and Europe ($250 billion). China is expected to remain the world’s largest trucking market over the next five years.

FOR-U

FOR-U

McKinsey notes that the digitalization of China’s FTL trucking market started early, and the industry has already consolidated. China’s trucking market is characterized by fragmented supply and elastic demand. On the supply side, individual long-tail truck drivers make up 90% of the market, while on the demand side, the contracting market is relatively small, with demand from small and medium-sized enterprises mostly elastic.

FOR-U

FOR-U

As a leading full truckload shipping company, FOR-U Smart Freight (also known as Fuyoukache in China) is designed to be a contract performance platform, not only connecting upstream and downstream users but also managing the entire transportation process to ensure transaction results. The platform tracks the trajectory of trucks and provides real-time warning of abnormalities, such as late arrival. Once abnormalities occur, the platform will intervene immediately to deal with them and use digital tools to ensure the goods arrive safely and on time.

FOR-U

FOR-U

McKinsey believes that as the pillar of the trucking market, FTL, with its elastic demand, has been disrupted by digital platforms, resulting in dramatically increased sector efficiency. With the emergence of such innovative models, industry competition will only become increasingly fierce in the future, while logistics efficiency and the overall quality of services will reach new heights.