J&T Express turns profitable in China

Yesterday (19 Aug), J&T Express released its unaudited interim results for the 1st half of 2024. The company registered an adjusted EBIT of US$118.243 million and a net income of US$31 million. 

Notably, adjusted EBIT for J&T’s China business has turned positive too. 

This is reassuring for its management and investors, with the latter worrying for a few years about whether the company will ever make money in China’s logistics red ocean. 

A few facts, and thoughts:

1. Express delivery market in China continues to grow. State Post Bureau’s data showed that overall market parcel volume in H1 2024 grew by 23.1% year on year. This number is in line with what we are hearing from some key network partners (franchisees) of major ecommerce logistics companies. We discussed how this happened in conjunction with platforms pushing to lower prices in the podcast episode analysing 6.18 shopping festival results; 
   
2. It seems J&T’s initial strategy of price war and aggressive subsidiaries paid off. It has earned a seat on the table as one of the few players in China with nationwide coverage and a sizeable market share; 
   
3. Competition in China, however, seems to have reached a stable state, with J&T controlling about 11% of the market share. As one key executive with an incumbent logistics player told us: “J&T is aggressive, but so are in defending our market share. We will fight them to the bone”. Getting additional domestic market share from Chinese competitors will not be easy for J&T; 
   
4. Therefore, new markets are where J&T can focus most of the growth attention. It has already broken into the Mexico and Brazil markets well, almost by brute force while sorting out structures and processes along the way. The fast growth of ecommerce as well as fragmentation of last mile logistics in these two countries gave very good opportunities for J&T to set the standard and redefine the market; 
   
5. J&T has tried the last mile market in the US, which back then proved a tougher market to crack. In the ensuing market gap, a few homegrown logistics startups in North America have benefited from the rise of SHEIN and Temu. Whether J&T Express will attempt North America again, or attempt the lucrative (but fragmented and more complex) European market, is worth watching. 
   
6. J&T has listed the top five market players in Southeast Asia in 2024 without specifying competitors’ names. Although it is not hard to derive that Company A is SPX Express (formerly ShopeeXpress), Company B is Lazada Express, Company C is Flash Express, while Company D is Thailand Post. Ninja Van and Kerry Express are not on the list:
   
7. We can also see from the list that Shopee’s in-house logistics already achieved 90% of the volume of J&T (1.81b vs 2.04 b parcels). If not for TikTok Shop’s volumes given to J&T, SPX Express would have already become the market leader in Southeast Asia;

To understand about J&T as a company, you can refer to Momentum Works Who is J&T Report: