China's express delivery industry is shifting toward a new stage of transformation and upgrading. In the first half of 2026, the industry processed 100 billion parcels, up 5 percent year on year, while business revenue surpassed 770 billion yuan ($114.82 billion), up 7.3 percent. Notably, revenue growth outpaced parcel volume growth for the first time in a six-month period, signaling a structural realignment in the market.

This trend is clearly reflected in recent financial reports from major publicly listed couriers. SF Express reported a 9.3 percent year-on-year increase in core net profit (excluding one-time gains and losses), while YTO Express, Yunda Express, and STO Express each posted shareholder net profit growth exceeding 70 percent during the same period.

With profitability consistently outpacing volume expansion, the sector's traditional strategy of sacrificing margins for market share is giving way to a more sustainable model. This marks a decisive pivot toward operational efficiency and value-driven growth.

But how is this transition unfolding, and what will drive the next phase of expansion? Major logistics providers have outlined their strategic adaptations in response to these questions.

Technological innovation is at the forefront of this shift. In June, JD Logistics -- the supply chain arm of e-commerce giant JD.com -- deployed China's largest rural drone delivery network in Zizhong county, Sichuan province. The system now serves 131 administrative villages, delivering packages to remote mountain communities in as little as seven minutes.

At the Jianggao mail processing center in Guangzhou, south China's Guangdong province, human workers collaborate with eight humanoid robots on automated sorting lines. These machines seamlessly pick, rotate, and position packages at a rate of 800 units per hour.

"A significant portion of the industry's profit surge in the first half of 2026 stems from the maturation of digital infrastructure investments made in prior years," explained Yu Rao, senior engineer at the Development & Research Center of the State Post Bureau. He noted that artificial intelligence is increasingly integrated across the logistics chain, with widespread adoption of drones and autonomous delivery vehicles serving as key catalysts for cost optimization and operational efficiency.

For example, YTO Express has implemented an AI-driven routing platform that analyzes historical shipment data and real-time operational costs to optimize delivery paths. During the first half of 2026 alone, the system reduced the company's operating expenses by approximately 90 million yuan.

ZTO Express has similarly leveraged automation in customer support. Its AI-powered system now autonomously resolves roughly 90 percent of merchant after-sales requests and 70 percent of recipient inquiries from initiation to closure. "More than 60 percent of routine customer issues are now handled end-to-end by our intelligent service platform, substantially cutting labor expenditures," said Yang Wen, chief technology officer of ZTO Express.

Fleet automation is also scaling rapidly. By the end of June, Yunda Express had more than 1,500 autonomous delivery vehicles across its network, an increase of more than 1,000 from last year. Standardizing large-scale autonomous operations has lowered transport costs at local distribution hubs by 30 percent.

Across the broader postal and courier sector, advanced technologies -- including AI customer service, automated sorting, smart security screening, computer vision-based surveillance, and dynamic route optimization -- are accelerating deployment. Nationwide, the industry now operates more than 16,000 autonomous delivery vehicles and over 400 drones dedicated to last-mile logistics.

"Throughout the 15th Five-Year Plan period (2026-2030), we will accelerate the integration of frontier technologies across the logistics sector and cultivate new engines of economic growth," said Xu Huarong, deputy director-general of the department of policy and regulation of the State Post Bureau.

Financial performance metrics further indicate that average revenue per parcel has risen across the board since the start of 2026.

"Sustained regulatory efforts to curb cutthroat price competition have been instrumental in reversing this trend," Yu added. Following a July 2025 symposium convened by the State Post Bureau, which mandated compliance with fair competition regulations, the sector's notorious price wars have steadily subsided. Average delivery rates have climbed incrementally, enabling firms to restore healthy profit margins.

Industry analysts observe that the sector's traditional reliance on e-commerce-driven volume surges has plateaued. Consequently, diversifying revenue streams beyond online retail has emerged as a top strategic imperative for major couriers.

So where is the next wave of growth originating? Two key avenues stand out:

--Expanded service scenarios

JD Logistics is increasingly moving beyond basic parcel delivery to offer tailored supply chain solutions. The company now provides customized fulfillment strategies for home appliance manufacturers and integrated warehousing and last-mile delivery for supermarkets and retailers managing omnichannel sales. During the first half of 2026, its integrated supply chain division generated 59.4 billion yuan in revenue -- a 18.5% year-on-year increase -- positioning it as a primary growth engine.

Similarly, SF Express has pioneered specialized logistics offerings, including dedicated transport for winter sports gear and a door-to-door luggage forwarding service that enables tourists to travel unencumbered. By targeting unmet consumer demands, the company has successfully penetrated niche segments such as cultural tourism, trade exhibitions, and specialty retail. These differentiated, high-value services are establishing what executives call a "second growth curve."

-- Global and domestic market expansion

Internationally, YTO Express is broadening its cross-border footprint, launching 170 air cargo routes that span most of Asia and reach into Eastern Europe. JD Logistics is also rapidly expanding its overseas warehousing network. It now operates more than 200 overseas warehouses and direct-mail warehouses in 26 countries and regions, driving sustained rapid growth in its international business.

Domestically, couriers are targeting underserved lower-tier and more remote markets. J&T Express is penetrating remote western provinces, notably modernizing its Yinchuan distribution facility in Ningxia into a regional smart logistics hub to stimulate parcel volume in less developed areas. Yunda Express is doubling down on rural commerce, establishing village-level collection points in key agricultural production zones and deploying dedicated freight corridors to capture growing grassroots demand.

He emphasized that as competition shifts toward value creation, technological advancement, customer experience, and market diversification will define the next generation of industry leaders.

"After more than a decade of hyper-growth driven by sheer volume, the industry is transitioning away from speed-at-all-costs expansion toward a balanced model that equally prioritizes service quality and operational efficiency," Yu concluded.

(Source: People's Daily Online)