Yunnan, renowned as the "Land of Flowers" and "Fruit and Vegetable Paradise," boasts unparalleled geographical advantages and climatic conditions. Coupled with its strategic position as an open frontier facing Southeast Asia, the province should be a powerhouse in logistics. However, as competition in cold chain logistics and urban delivery intensifies, local enterprises in Yunnan are grappling with existential challenges. The pressing question is: How can they break through these constraints?
On October 23, the "Integration 2021: Logistics Industry Tour Seminar (Kunming)—Cold Chain and Urban Delivery Session" was held in Kunming. Organized jointly by Yunlian Think Tank and the Yunnan Supply Chain Association, the event brought together industry stakeholders to discuss the bottlenecks hindering the development of local cold chain and urban delivery enterprises and explore potential solutions.
The Dilemma of Yunnan's Cold Chain and Urban Delivery Sector: Intense Competition and Systemic Weaknesses
Yao Lei, Secretary-General of the Yunnan Supply Chain Association, highlighted the stark disparities between Yunnan and other provinces in the cold chain and urban delivery sectors. Key issues include:
- Low Barriers to Entry and Unregulated Competition: The relatively low entry thresholds in cold chain and urban delivery have led to an influx of companies, resulting in chaotic market competition, frequent price wars, and shrinking profit margins.
- Weak Business Frameworks and Management Systems: Many enterprises suffer from inadequate business structures and management systems. While these weaknesses may not be apparent during prosperous times, they become glaringly obvious during economic downturns and heightened competition.
Cold Chain Logistics: Fragmented Networks and Lack of Awareness
Zhang Rong, General Manager of Yunnan XianDong Traceability Supply Chain, pointed out the glaring issues with cold chain logistics vehicles in the region. Non-standardized vehicles and operational risks are rampant, with the most critical problem being the frequent "breakage" of the cold chain. Incomplete data from refrigeration units or cold storage facilities often fail to meet client requirements, undermining temperature control throughout the logistics process.
Moreover, there is a general lack of awareness about cold chain logistics among businesses, and end customers often have low expectations, further stunting the growth of the sector.
Urban Delivery: Limited Market Capacity and Low Awareness
Cui Genliang, General Manager of Yunnan Dingqian Logistics, which has specialized in cold chain urban delivery for five years, echoed similar concerns. "Many view cold chain as a high-margin, sunrise industry, but the reality in Kunming is far from rosy," he remarked.
Beyond factors like Kunming's temperate climate and short urban distances, the primary challenge lies in the limited local market capacity. With a relatively small population and insufficient domestic consumption, the product structure primarily caters to local demand. However, the market is saturated with local players, and the low entry barriers—requiring only a few refrigerated trucks to start operations—make it difficult for businesses to thrive.
Song Shengxian, General Manager of Yunnan Shengxian Logistics, a veteran in the urban delivery sector for over a decade, noted that the lack of client awareness is another hurdle. "When negotiating with distributors, many don’t fully grasp the value proposition of urban delivery services. Often, warehouse and delivery operations are handled by relatives or acquaintances, effectively sidelining professional urban delivery providers."
Additionally, many local urban delivery firms operate on a shoestring budget—leasing a warehouse and buying a truck to start business—leaving them vulnerable to risks. Small, substandard warehouses fail to attract clients, while scaling up brings heavy asset burdens. Without substantial upfront capital, growth becomes an uphill battle.
Pathways to Breakthrough: Strengthening Core Competencies and Collaborative Development
Wu Ming, Chairman of Yunnan Hongsentong Logistics, believes the challenges in logistics sub-sectors are universal: high costs, low freight rates, and inconsistent standards. The solution lies in consolidating cargo volumes, establishing organizational structures, and implementing standardized management practices. In short, fostering consensus, cooperation, and unity through systematic management is key to addressing these systemic issues.
Overall, both cold chain and urban delivery sectors need broader participation to steer the market toward standardization.
Strengthening Core Competencies: The Foundation for Overcoming Challenges
In recent years, the logistics market has seen persistently low freight rates, affecting both urban delivery and cold chain sectors. Compounded by the influx of external platforms, local logistics firms have had to focus on "strengthening their core competencies." During visits to Yunnan-based enterprises, the most common refrain heard by Yunlian Think Tank was, "Platforms aren’t something to fear—either build your strength or embrace them."
Zhang Tao, General Manager of Yunnan Jinyuan International Logistics, observed that while every niche sector tends to evolve toward platformization and spawn unicorns, Yunnan has yet to see a specialized regional platform emerge. The urban delivery and cold chain markets in Yunnan are still in their developmental stages, and the journey toward maturity will inevitably attract more players. Furthermore, Kunming's designation as an international regional hub means it will not only serve as Yunnan’s capital but also handle cross-border logistics, presenting significant growth opportunities for local enterprises.
Zhang Tao emphasized that establishing a regional logistics platform is a viable strategy, as national unicorn platforms do not preclude the success of regional ones. By focusing on their strengths, local businesses can thrive in a market that still has three to five years of growth ahead. Regional platforms, with their localized expertise and personalized services, often outperform national players at the local level.
Platformization: Opportunities for Regional Players
Recent shifts in commerce have led to increasingly fragmented orders, which are carving into the full-truckload market. This fragmentation manifests in two ways: urban delivery and cold chain logistics.
Ding Qi, Senior Researcher at Yunlian Research Institute, noted that while the scale of express and less-than-truckload (LTL) logistics continues to grow, the full-truckload market is shrinking. The perception that regional cold chain platforms outperform national ones stems from differing developmental stages. Major national platforms have yet to penetrate Yunnan, but once they secure larger cities, they will inevitably turn their attention to the province. Therefore, local enterprises must build robust defenses. When they become formidable enough, platforms will seek collaboration on their terms.
Technological Empowerment: New Energy and Cost Optimization
In the process of strengthening their core competencies, companies are also leveraging technology to reduce costs, such as adopting new energy vehicles. Pan Mengqing, General Manager of Yunnan Dayu Supply Chain, stated, "The new energy urban delivery vehicle sector is undergoing a shake-up. Post-pandemic standards have risen, and Kunming is now facing reforms. The root of cutthroat competition isn’t new energy vehicles but the absence of collective action. With increasing government support for new energy vehicles and Kunming’s status as a tourist city with excellent air quality, the push for cleaner skies will accelerate, offering local businesses a unique opportunity."
Embracing Change: Seizing Opportunities for Self-Preservation
Yao Lei emphasized that in the face of new challenges, enterprises must seize opportunities to evolve. Aligning with national strategies for modern logistics—particularly in cold chain and urban delivery—businesses must prioritize self-reliance. When platforms arrive, the choice between collaboration and assimilation will remain in their hands.
To navigate these challenges, Yunnan’s cold chain and urban delivery firms must hone their operational excellence, enhance service quality, adopt technological innovations, and seek collaborative opportunities. Building regional platforms could be the key to breaking through the current impasse and achieving sustainable growth.