As the "leader" of franchised express delivery companies, Zhongtong still holds the top market share in the industry and its performance continues to rise. However, Zhongtong, which has more than 30000 branches, has repeatedly attracted market attention due to branch closures.
On March 20th, Zhongtong Express (New York Stock Exchange code: ZTO and Hong Kong Stock Exchange code: 2057) announced its unaudited financial performance for the full year of 2023. According to the financial report, in 2023, Zhongtong Express exceeded the 30 billion mark in package volume for the whole year, reaching 30.2 billion pieces, a year-on-year increase of 23.8%, and its market share expanded by 0.8 percentage points to 22.9%.
Under the scale advantage of significant growth in business volume, Zhongtong's net profit growth rate is even higher than the growth rate of business volume. According to the financial report, in 2023, Zhongtong's adjusted net profit increased by 32.3% year-on-year to 9 billion yuan.
As the company with the highest market share in China, Zhongtong's scale advantage was clearly reflected in last year's financial report. Yan Huiping, Chief Financial Officer of Zhongtong, stated that Zhongtong's scale advantage, increased production capacity, and sales and management expense structure jointly offset the negative impact of price decline, resulting in a 4.1% to 26% increase in operating profit margin for the year.
Compared to the growth rate of business volume and net profit, Zhongtong's revenue data performance is average. Especially under the influence of price wars, Zhongtong's core single ticket revenue in 2023 decreased by 11.3%, or 1.6 cents. Therefore, even if the growth rate of business volume reached 23.8%, the overall revenue only increased by 8.6% year-on-year to 35.377 billion yuan.
Interface News also noticed that although the fourth quarter of last year included the peak season of express logistics, which was Double Eleven, the single ticket price of Zhongtong Express decreased by 18.2% year-on-year, leading the decline rate of the whole year.
The fierce price war has made the relationship between the headquarters of express delivery companies and franchisees increasingly tense. The vicious competition in the industry is still accelerating the disintegration of the profitability of express delivery outlets, and many outlets are facing operational difficulties. There are more and more branches that want to be transferred, but they usually have a price but no market.
The network stability of China Unicom is also facing challenges, especially after entering 2024, there have been frequent reports of China Unicom branch explosions. On March 13th, the news of a large number of resignations of delivery personnel at Wuhan Yizhongtong branch, resulting in delayed delivery, hit the hot search, causing a backlog of packages that could not be delivered.
Zhongtong responded to this by stating that due to the recent high volume of deliveries, the delivery time has been affected, and the branch has increased manpower to accelerate delivery. The dispatch of personnel from the headquarters of the express delivery company to assist the problematic branch has indeed solved the problem of warehouse explosions in a short period of time. However, in the long run, the problem of continuous reduction in delivery fees at the end of the line and unusually fierce price wars at the front end still exists behind the phenomenon of stock explosions.
As of December 31, 2023, Zhongtong has more than 31000 branches, 99 sorting centers, more than 6000 direct network partners, more than 3900 trunk transportation routes, and over 10000 trunk vehicles, of which more than 9200 are high capacity vehicles with a length of 15 to 17 meters.
In the future, how to stabilize over 30000 branches under Zhongtong will become a major challenge.