China's logistics industry is witnessing its second wave of public listings following the collective IPO surge of express delivery companies, with road freight enterprises now taking center stage. ANE Logistics and Full Truck Alliance went public last year, while Shengfeng Logistics has filed with the U.S. Securities and Exchange Commission, and Loko has submitted its listing application to the Hong Kong Stock Exchange. Companies including Lalamove, CCTD Smart Transportation, Best Express, and ZTO Express have also reportedly announced IPO plans.
As competition intensifies in this trillion-yuan market, road freight companies face significant challenges behind the seemingly heated IPO rush, including razor-thin profit margins and urgent needs for operational model upgrades.
Digital Freight Leads the IPO Charge
Handling 75% of China's total logistics volume, the road freight sector represents a massive market. Numerous companies are now preparing to go public, hoping to leverage capital markets for competitive advantage.
Shengfeng Logistics, a 5A-rated comprehensive logistics provider established in 2001, specializes in domestic warehousing, road transportation, and urban distribution. With contract logistics as its core business, the company serves multinational corporations including Schneider Electric, Xiaomi, TPV Technology, CATL, and BYD. Transportation services accounted for 94.6% of its 2021 revenue, with warehousing management making up 4.9%.
Best Group Chairman and CEO Johnny Chou revealed during an April 2021 network conference that Best Express was actively raising capital with plans to go public by 2022. Similarly, Full Truck Alliance had filed for a Nasdaq listing in May 2021 but withdrew its application in April 2022 due to Sino-U.S. digital competition and data security concerns. This development served as a cautionary tale for other Chinese digital logistics firms considering U.S. listings.
Examining the Road Freight IPO Contenders
According to a 2021 report on China's logistics and supply chain listed companies, the road freight sector currently has seven publicly traded firms: three on the A-share market, two in Hong Kong, and two in the U.S. These companies represent diverse business models, including automotive contract logistics (Changjiu Logistics), less-than-truckload services (ANE Logistics, Deppon, Best Group), and digital freight platforms (Full Truck Alliance, Lalamove).
By market capitalization, Full Truck Alliance leads with ¥50.86 billion, followed by Deppon (¥16.89 billion) and Transfar Zhilian (¥14.83 billion). Notably, ANE Logistics' market value has plummeted 73.37% since late 2021, while Lalamove's share price dropped from HK$21.5 at its June 2022 debut to HK$4.32 by September's end.
Profitability Challenges Persist
Despite the sector's enormous scale, profitability remains elusive for most players. Data from the China Federation of Logistics & Purchasing shows that 30 major road freight companies averaged just 4.8% profit margins in 2021—two percentage points below industrial enterprises. Digital freight platforms typically achieve 36% gross margins, compared to 12% for actual road transport operations.
Both traditional carriers and digital newcomers struggle with profitability. While express companies' freight divisions like SF Express and ZTO Express show rapid growth, their earnings remain weak. Contract logistics specialists like Changjiu and Shengfeng demonstrate better profitability, with Shengfeng reporting ¥39 million and ¥42 million net profits in 2020 and 2021 respectively.
However, most large listed road freight companies operate at a loss. Digital platforms including Full Truck Alliance and Lalamove, despite improving industry efficiency and mobilizing transportation capacity, haven't established sustainable business models. Full Truck Alliance reported adjusted net losses of ¥171 million and ¥80 million in 2019-2020 despite ¥35.66 billion revenue in 2020. Loko showed ¥50.7 million net profit in 2021, but received ¥1.77 billion in government subsidies for its digital freight operations.
Structural Challenges Demand Innovation
China's ¥4.7 trillion road freight market remains highly fragmented. Thirty leading companies generated just ¥190.4 billion in 2021 revenue—a mere 4.05% market share. Combined shipments from ANE Logistics, Deppon, and Shengfeng totaled 2.51 million tons, representing just 0.05% of national road freight volume.
While road freight's 75% share of China's commercial transport matches the U.S. (72.5%), operational differences persist. Most Chinese truck drivers (83%) own their vehicles—56.6% still paying loans—versus predominantly company-employed U.S. drivers. This fragmentation creates inefficiencies, with individual operators unable to achieve the scale economies enjoyed by fleet operators.
Logistics costs remain elevated at 14.6% of GDP compared to America's 8%, despite China's improvement. The sector's upgrade depends on manufacturing evolution, as e-commerce products (69% share), fast-moving consumer goods (65.5%), and appliances (58.6%) dominate shipments.
As China's manufacturing sector advances, it requires corresponding logistics scale. Where express delivery's first IPO wave featured competing regional players, road freight's second wave confronts a fragmented spot market. For sustainable growth, companies must either strengthen cargo control through strategic partnerships or position themselves as indispensable supply chain links.