Chinese logistics firm ZTO Freight nets over $300m in Series B round

Source: ZTO Express

ZTO Freight, a less-than-truckload logistics unit owned by Chinese delivery group ZTO Express, has secured over $300 million in a Series B round of financing to cement its market position as e-commerce in China is poised to grow further in the following years.

While it did not disclose the investors of this round, ZTO Freight’s earlier investors include Sequoia Capital China, Chinese asset manager CDH Investments, and Yunfeng Capital, a private equity (PE) firm co-founded by e-commerce giant Alibaba Group’s Jack Ma.

The fresh capital will be used to double down on the R&D of its information system, build new infrastructures, and acquire talent to help “consolidate and accelerate its development momentum,” said ZTO Freight in a statement.

The firm said that it had previously raised a total of over $100 million across a Series A round in June 2018 and a Series A+ round in May 2020.

ZTO Freight offers one-stop, small-load logistics services to individuals and corporate clients such as Alibaba and its e-commerce sub-brands, online discount retailer Vipshop, and China’s second-largest beer maker Tsingtao Brewery.

Founded in August 2016, the firm mainly operated in the Greater China market before its global foray starting from an entry into Cambodia in March 2020. It added airfreight services as a new offering last June.

Expanding market share

Its parent ZTO Express, which claimed a share of 20.4% in China’s express delivery market in 2020, had experienced rapid business growth since its inception in May 2002.

ZTO Express and its major rivals including SF Express, Deppon Express, and YTO Express have benefited from the fast-growing domestic market where e-commerce turnover grew 70.6% between 2015 and 2020. The nationwide e-commerce turnover is expected to reach 46 trillion yuan ($7.2 trillion) by 2025, or a 23.6% increase from the level in 2020, according to official statistics released in October 2021.

“Market dynamics continued to shift towards higher volume concentration yet clearly divided in relative scale as well as profitability,” said Lai Meisong, ZTO Express’ founder, chairman and CEO, in the firm’s Q3 financial report in November 2021.

“Volume and market share have been and will continue to be crucial to the growth and future of an express delivery business whose winning elements are scale and efficiency. The industry has potentially reached a turning point where competition becomes more orderly, and price begins to stabilise,” said Lai, adding that “expanding market share” remains “one of ZTO’s top priorities.”

An express delivery partner to some of China’s biggest e-commerce sites like Alibaba, Pinduoduo, and JD.com, the parent company posted revenues of over $1.1 billion in the third quarter of 2021 with an increase of 11.3% year-on-year. Its gross profit rose 12.7% year-on-year to $243.4 million in the quarter, shows its latest financial results.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.