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Logistics sector regains momentum as China recovers from coronavirus

The index for express delivery services in China reached 103.7% in March.

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China’s logistics sector has picked up pace in March as businesses, who have largely resumed operations since February after the brunt of the coronavirus outbreak passed, have begun placing orders again.

The express delivery index, which monitors door-to-door delivery activities in all sub-sectors in China’s service and manufacturing industries, reached 103.7% in March, 12.5 percentage points higher than in February, according to data released by the China Federation of Logistics & Purchasing on Monday.

The federation attributed last month’s increase to a very low index in February, which reached 91.2%, and increased logistics demand due to companies resuming operations following the curb of COVID-19.

The latest number in the index, which does not take account of traditional logistics services such as trucking, is the highest this year as logistics demand increased in the economy, which was ravaged by the pandemic in February, the federation said. The express logistics index stood at 105.7% in December 2019.

Changes in the express logistics index in the past three months are in line with the Logistics Performance Index (LPI), an indicator that marks activity in the entire logistics sector, including express delivery and other forms of logistics such as heavyweight shipping. LPI reached 51.5% in March, up 25.3 percentage points compared with February, according to data released by the same federation on April 2.

A reading above 50% for the LPI indicates expansion while a reading below reflects contraction.

Hangzhou-headquartered logistics company Best (NYSE: BEST), which owns express delivery firm Best Express, said earlier this month that the company will create over 40,000 jobs in China and Southeast Asia in 2020 to meet demand after the sector’s recovery.

JD Logistics, an arm of Chinese e-commerce giant JD.com, is also looking to hire over 20,000 new warehouse and delivery workers to meet surging online demand, South China Morning Post reported in late March.

KrASIA reported in February that China’s largest e-commerce company, Alibaba, once faced delays in its logistics and supply chain as most couriers in China were held back by nationwide efforts to fight the coronavirus outbreak back then. Later, the company’s management confirmed the delays in logistics and said during the company’s latest earnings call that they estimated revenue growth rate will decrease during the March quarter as a result of the epidemic.

Alibaba’s logistics arm Cainiao confirmed via its WeChat account that couriers affiliated with its network, including Best Express, resumed express delivery services for people in Wuhan on March 25, capital of central China’s Wuhan province and the hardest hit region in the country.

One week ago, JD Logistics said via its WeChat account that the number of parcels the company delivered in March in Hubei province has exceeded the number in the same month in 2019, and has increased three times compared with the number in February this year.