China eCommerce Runs on Diesel

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China eCommerce growth dispelled concerns that diesel sales might falter, as increasing ecommerce deliveries to the four corners of the People’s Republic counter manufacturing losses. Hellenic Shipping News representing the mega transport companies that tanker the fuel to refinery ports describes this as further proof that the economy is moving from manufacturing to services.

Rapid Growth of China eCommerce Service Industry

Economists previously anticipated the slump-that-never-happened on the back of a drop in diesel-powered production and delivery trucks bringing in the fuel. “The soaring China e-commerce growth has spurred surprise strength in diesel demand this year, offsetting continuing weakness from the industrial and manufacturing sector,” said analyst Gordon Kwan of Nomura Research in the reported interview.

China eCommerce Now Bigger that United States

China has taken over from the U.S. egged on by sites like Alibaba that accommodates more virtual trading than eBay and Amazon taken together. Analysts already predict China’s total numbers will hit $720 billion within two years, and there is no indication of internet trading tapering off soon after that.

The boom in courier vehicle fuel has spurned growth in delivery vehicle acquisition too, with Yuantong Express – top four China eCommerce logistics firm – adding 400 more trucks in 2014 to reach a fleet size of over 3,000. JD.com’s fleet has quadrupled in the past two years confirming the trend.

Could the Diesel Bubble Burst?

Probably not, although it may subside slightly after China ecommerce asymptotes as it reaches the top of the growth curve. At that point China’s shift away from energy-intensive industries such as coal mining and steel making may start to bite because markets lost do not recover easily.

“There is no longer the type of growth that we saw in previous years,” mourns an operation manager at a logistics firm delivering diesel to Guangzhou-based factories. “Business is kind of flat”. And it is likely to stay that way in the face of the currently burgeoning China eCommerce service industry.

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Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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