THE express industry in China has not kept pace with the demands of e-commerce, says SF Express vice president George Li Dongqi, also president of SF Express Airlines.
Speaking at the Asian Logistics and Maritime Conference (ALMC), Mr Li said the express industry capacity has been growing at 15 per cent a year, even that double-digit growth was not enough to cope with the rise of Chinese e-commerce.
E-commerce accounts for 12 per cent of sales in China today, making it the largest e-commerce market in the world - and one expected to grow another 46 per cent by the end of the year to US$446 billion, according to iResearch.
Henry Tan, CEO of Luen Thai Holdings, the Hong Kong-listed garment giant, with more than US$1 billion in annual sales, said he expects traditional brick-and-mortar retailing to "collapse" as e-commerce grows to account for 50 per cent of Chinese retail sales in China.
Mr Li said this growth has led some e-commerce providers to manage logistics on their own. Some, like JD.com, are setting up warehousing, while others are facilitating shipments instead.
Alibaba, the largest e-commerce company in China does not maintain inventory like Amazon, but has allocated $200 million to develop its logistics, a move likely to induce a change in Alibaba's approach to inventory, Mr Li said.
"If we cannot provide different options, e-commerce will focus on building logistics," Mr Li told some of the 1,600 delegates attending the conference at the Hong Kong Convention and Exhibition Centre in Wanchai.
All this e-commerce in China, of course, bodes well for air cargo; as Tan remarked: "We should all buy FedEx stock."
But can the current infrastructure maintain it? Steven Verhasselt, an Air Cargo Management Group senior consultant, based in Hong Kong, said that there simply are not enough pilots in China to fly the freighters needed to handle all the e-commerce and express volume.
And China does not appear to be inclined to change its regulations to allow for more foreign pilots to handle the flow, he said.