Drivers who will pick up prescriptions drugs, deposit cheques and deliver birthday cakes — all in under an hour — are a growing trend in China. Delivery platforms are branching out from ecommerce orders to courier services. Logistics start-up Lalamove is one of the fastest growing in the space.
The Hong Kong-based company, which is reported to have filed for a US listing, was last valued at $10bn. Demand is accelerating. Surging road freight volumes in China — Lalamove’s biggest market — now exceed all other countries. The market was worth $930bn last year, according to China Insights Consultancy. The pandemic boosted orders, with volumes growing 46 per cent in January compared to the same period a year earlier. By sales, the market is expected to grow by 7.5 per cent each year to 2027.
For now, this is a fragmented sector. Lalamove is among a number of delivery and freight platforms along with GogoX, Manbang and Full Truck Alliance. All hope to raise more capital to increase their market share. Full Truck Alliance, which raised $1.6bn in New York this week, priced its shares at the top of the expected range. Shares rose 13 per cent on the first day of trading. This success bodes well for Lalamove.
China’s tech giants pose a considerable threat. JD.com delivery unit JD Logistics, which listed in Hong Kong last month, and Didi Freight, the delivery business of China’s biggest ride-hailing app Didi Chuxing both have more firepower to compete.
But smaller companies such as Lalamove have an edge. China is in the midst of an antitrust crackdown on local tech leaders. Didi is the latest company reported to be under investigation by market regulators for pushing out smaller rivals.
While tech giants face off with regulators, Lalamove has expanded to more than 20 markets, including the US. Unlike lossmaking ride hailing start-ups, it counts companies such as retailer 7-Eleven and oil refiner Sinopec among its customers. The combination of consumer and business suggests sustainable mileage.
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