JD logistics truck

JD Logistics narrowed its first-half loss despite the COVID resurgence

JD Logistics narrowed its first-half loss and saw revenue jump 20.9 percent year-on-year to RMB 58.6 billion (now $8.5 billion), as the Chinese warehouse operator weathered uncertainties in the macro environment and the resurgence of COVID-19 at home.

The logistics arm of Beijing-based e-commerce giant JD.com posted a loss of RMB 1.4 billion for the six months to June, against RMB 15.2 billion a year earlier. The improvement was due to a lower loss on fair value changes of convertible redeemable preferred shares, better cost-control measures, effective restructuring of the customer portfolio and rapid revenue growth that drove efficiency gains, the company said in a filing with the Hong Kong stock exchange.

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Executive director and CEO Yui Yu hailed JD Logistics’ warehouse-centric supply chain management and fulfilment approach for demonstrating exceptional resilience and operational stability in emergency and extreme situations.

“With the evolving pandemic and business environments, a set of reliable, resilient and agile supply chain solutions has become a rigid demand for companies to maximise their capabilities to resist risks,” Yu said in the filing. “Against this backdrop, our total revenue maintained a sustained and steady growth.”

Streaming Success

In the first half of the year, JD Logistics promoted a modularisation strategy to fulfil growing demand from an increasing number of small and medium-sized enterprises. The company served SMEs via standardised and integrated packages of supply chain products covering eight specific industry verticals, including liquor, snack food, childcare and cosmetics.

Rui Yu JD Logistics

JD Logistics executive director and CEO Yui Yu

After serving as the logistics partner for the Spring Festival sales promotions of a live-streaming e-commerce platform, JD Logistics deepened the partnership and now serves more than 10,000 merchants on the platform.

The company maintained steady growth in the number of its external integrated supply chain customers, which reached 62,566 in the second quarter, up 13.2 percent from the year-earlier period. At the same time, average revenue per customer fell by 2.2 percent year-on-year to RMB 113,617, owing to the pandemic’s impact on customers’ business and JD Logistics’ own fulfilment operations.

JD Logistics operated more than 1,400 warehouses and 7,600 delivery stations as of June, employing over 200,000 in-house delivery personnel. The company also highlighted the expansion of its network coverage and improved flexibility through collaborations with strategic partners in land, maritime and air transport.

Shipping Empire Grows

Aside from the company’s organic growth, JD Logistics beefed up its mainland shipping network in the first half with the acquisition of a 66.5 percent stake in Shanghai-based Deppon Logistics for RMB 8.97 billion ($1.4 billion).

The transaction was completed in July, and Deppon’s financials have been consolidated into JD Logistics’ results.

“We anticipate that JD Logistics and Deppon will offer complementary advantages in logistics networks and product categories,” the company said in Tuesday’s filing. “Together, we will focus on our competitive advantages, such as express delivery and supply chain, to expand market scale, improve service experience, enhance network operation efficiency, reduce comprehensive operating costs, and continue to create greater value for customers.”

The Deppon acquisition took place less than a year after JD.com’s property division agreed to acquire a 26.38 percent stake in China Logistics Property Holdings for HK$3.99 billion (then $513.5 million). More recently, JD Property bought a warehouse facility in China’s Hubei province from Singapore-based SC Capital Partners and Japanese developer Unified Industrial, as reported by Mingtiandi earlier this month.

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