Behind the Scenes of Shanghai’s Express Deliveries

Wednesday, December 16, 2009 8:39

One of the things that fascinated me most about this city was its express delivery network, a service that I had used quite often to send letters/ packages across town, but paid little attention to as the people behind it seem quite decentralized and rarely cared to say anymore more than “sign here”. Then, a couple years while wondering why so many people seemed to be hanging out near the turnstiles of the metro station, I realized something.

That, in addition to handling millions of riders a day, the Shanghai metro system was in fact the backbone for moving Shanghai’s express packages around, and that the people hanging out by the turnstiles were in fact collecting and distributing packages and letters that were moving through the system. Over time, as my eyes adjusted and my time on the metro increased, I began to see that there were more actors in play.  You had runners who would move the packages from the originating office to the metro, to dedicated metro runner who did not more than run packages from the turnstiles to the the train carriages, and then the person who rode the metro all day long making the hand off.

It was a hive of activity that was low costs, and had the potential to move packages across the country!

Over the course of a week, as part of a program to shake things up and open their eyes to Shanghai, I sent out 2 of my local staff to check it out and report back to me just how this system worked. To work out not only the logistics behind the network (my original interest), but to see how the various actors made money (my initial assumption was that they were all independents) and how much was moving through the system.

Structure:
Contrary to my initial thoughts, the first day showed that the system was quite organized, and that there were between 3-5 companies that were largely in control of the majority of packages (there are some independents), and much like any other firm, these groups have develop a networks of branches to service their high traffic areas.

Line 2 is the money line. Hongqiao, Nanjing Road, Bund, Lujiazui, and Century Ave. commercial districts produce volume from from Century Avenue to Loushanguang/ Zhongshan park areas, and a decent chuck moves along line to the Xintiandi and Xujiahui areas as well. So, what you have are hubs that are spread out along those stations… Dongchang Road, People’s Square, Nanjing West, Zhongshan Park, and so on.

The Actors
To support this network requires a lot of people, and it is labor intensive

In the office: Boss (Laoban) and dispatchers man the desks, scan packages into the system, and schedule
Above ground: Runner (Ban Yun Gong), delivery men (Kuaidi Yuan), and sales people (yewu yuan)
Underground: Internal dispatchers (Ji Zhang Yuan)and metro riders (Di Tie Kuai Di Yuan)


The Flow:
As you may imagine, moving a few thousand packages a day over a network of 15 or so people requires a semi-manageable process, and contrary to my initial assumptions it is one that is actually tracked over the entire process through hand notes and a scan once it reaches the branch.

Once received, the package essentially enters the system and hits its first sort (near or long distance). If nearby, the package is taken to the branch for processing, and then carried by another runner to that area. Each runner will have a territory much like a standard delivery service provider. If the packaged is one that needs to be moved from the immediate area (cross town or across China), it enters a different system (as seen in the flow chart below).

The Costs:
Anyone who has used a kuai di service provider knows that everything is negotiable and that this is a cut throat market. While studying the traditional express market several years ago, we were locally very interested in seeing how these groups worked as well.. and it is all word of mouth and by mobile phone. So, the best salespeople give secretaries the best discount.

Outside of that though, it is a geography based system (no surprise) and the distance will determine the speed of delivery (no surprise there). for intercity deliveries, sending before lunch will essentially guarantee a same day delivery, but anything after lunch will “depend” on a few different factors (you can pay extra for priority service with some providers). For service outside of Shanghai, it appeared that any 2nd/ 3rd tier city could be serviced next day, but anything beyond that was anyone’s guess (I once sent a package to the furthest reaches of Jiangxi province that took 3 days).

So there you have it.  Shanghai’s kuaidi network.

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12 Responses to “Behind the Scenes of Shanghai’s Express Deliveries”

  1. Mike says:

    December 16th, 2009 at 3:05 pm

    This is a fantastic article of interest to anyone who’s been in Shanghai long enough to know that these guys hanging out in the metro are kuai di workers, not potential pickpockets (what some of my traveling friends have kindly ‘pointed out’ to me).

  2. corbett says:

    December 16th, 2009 at 3:16 pm

    Rich, this is fascinating. I always wondered what those people were doing. No idea it was a backbone to an entire delivery system. Makes you wonder what other industries rely on the subway.

  3. Alex says:

    December 16th, 2009 at 10:16 pm

    Very interesting. When visiting Shanghai I was intrigued by the volume of young men on the subway carrying flowers. While these flower-laden youth may not be bursting trains to capacity, coming from the Northeast it is rare to see anyone carrying flowers for weeks at a time.

    Perhaps this was a value-added service, opposed to the kuaidi described above. All were tall, reasonably handsome and fashionably dressed – typical Korean import pop star appearance – and used hands-free mobile phones to provide status and delivery updates, providing the clue they were a delivery service. Perhaps they sung too, I don’t know.

    For getting around Shanghai quickly the subway is an ingenious option, especially given Shanghai’s unique topography (a big river in the middle, and discrete business districts well served by the subway), even benefiting from small things (vs. cycle, for example), like good platform planning meaning quick transfers between lines. Interesting post.

  4. S. Rein says:

    December 16th, 2009 at 11:28 pm

    excellent Rich. Thank you

  5. vivi says:

    December 17th, 2009 at 12:35 am

    It’s been there for at least 5 years. The point is they don’t come out of the station at all, so there is almost zero cost for the transportation in a logistic company.

  6. Rich says:

    December 17th, 2009 at 5:15 am

    @ Mike – there are a lot of people hanging out in the subway, and to be honest, in my 6 years of riding the subway I have not seen a signle pickpocket. I have seen them at major tourist sites though, and I find it interesting that in the few times I have seen it in action no one will do anything but watch it go down.

    There are theories for that.

    @corbett – if you get on the outer lines, you will see all manner of cargo being transported. It is an excellent way to move large bundles for now, but there is a new regulation coming in directed at oversized items. Seems they will be deemed a security issue going forward.

    @Alex – perhaps those strapping young men were just in the dog house with their ladies… like a Tiger Woods without the billion dollars

    @Shaun – thanks.

    @Vivi – the first time I noticed it was about 4 eyars back, and I would not be surprised if it was in place since the 2nd day the metro was open. It is a very efficient and cheap way to move goods.

    R

  7. Cameron Wilson says:

    December 17th, 2009 at 7:37 pm

    Good article Richard. This system has indeed been in place for a long time and its a very clever one. Wouldn’t like to be the chap stuck on the metro all day though.

    As a regular commuter on line 4, I have noticed more and more big packages coming onto the trains. I wasn’t sure what they were but it would seem that as you suggest, many of these would seem to be kuaidi parcels. I think size restrictions are over-due – the metro is crowded enough as it is, especially around the train doors which is where these packages are always dumped.

  8. Rich says:

    December 17th, 2009 at 9:06 pm

    Cameron

    I have a post in mind about the social strata that exist on the metro lines that would more clearly address your observation, but in short what I have seen is that line 1-2 are more for middle class / white collar cargo movements while like 3-4 are going to me more along the lines of wholesale….

    you get out to line 9, and you go more into personal cargo as people are moving in and out of the city.

    Some very interesting and sometimes LARGE items are moving around!

    R

  9. Trin says:

    December 17th, 2009 at 10:21 pm

    Great article and it proves how amazing Shanghai metro system is.

  10. Rich says:

    December 18th, 2009 at 7:18 am

    Moderator Comment

    This is a post about how the metro system is being leveraged for commercial operations, and I should have done a better job of moderating this post to keep in with that scope. I have had to go back to edited a few comments in the meantime, and I apologize for having to do that (I don’t enjoy being a nanny), but the comments were getting personal

    So, going forward, please keep it with the topic, and if you want to get personal, political, or debate the moralities of different elasticities, then there are plenty of place to do that. This is just not the place.

    R

  11. Jonny says:

    January 14th, 2010 at 1:01 am

    What is the best kuaidi service in Shanghai? SF express no longer deliver to Ireland!! Bummer!

  12. David says:

    January 14th, 2010 at 1:44 pm

    Well done. Happy New Year.

    Who are the 3-5 companies? Are they contractors to the major branded firms, or do they carry a brand? Would I run into an SF courier on the Metro?

    Thinking beyond Shanghai, much of China’s long-distance express volume travels via rail (above-ground) as well. CRE has a monopoly on dedicated express cargo trains on major lines, and a dedicated cargo car on many express passenger trains.

    I wonder if the 2010 Expo will force ‘cargo’ restrictions on certain lines? Thoughts?