China’s logistics shares edge up ahead of what is set to be the world’s biggest shopping frenzy

Projections of an upsurge in demand for parcel delivery have boosted logistics stocks, as firms ramp up for this year’s Singles’ Day shopping festival.

Logistics stocks led A-share gains in the Shanghai and Shenzhen stock exchanges on Friday, with a gauge for road transport companiesrallying 5.7 per cent, followed by shipping sector’s 4.1 per cent increase, after China’s two largest e-commerce companies kicked off warm-up events earlier in the week for what is set to be the world’s biggest shopping frenzy.

The rally followed gains by some of the industry’s leading players, as courier service firms SF Holding and New York-listed ZTO Express surged 7.6 and 9.3 per cent respectively since the start of October.

Started in 2009 as a shopping blitz on November 11, the so-called Singles’ Day in China has surpassed Cyber Monday and Black Friday in the US as the world’s largest retailing event, where buyers bid for everything from daily groceries to holiday cruise packages.

Alibaba and JD.com commit nearly US$330m to beef up parcel delivery efficiency, ahead of Singles’ Day shopping festival

During last year’s festival, Alibaba Group reported record-smashing 24-hour sales of 120.7 billion yuan (US$17.8 billion) through its e-commerce platforms. A total of 2.68 million couriers were hired to whisk parcels from retailers to shoppers, according to estimates.

At this year’s launch event on Tuesday, Alibaba’s major rival JD.com announced it will allocate as much as 2.1 billion yuan to help merchants with their warehousing and delivery costs, 3.5 times more than the e-commerce giant’s original budget of 600 million yuan.

The subsidies will help retailers on its platform to stock up on merchandisein the lead up to the event. JD will also provide additional storage sites in 11 Chinese cities including Guangzhou, Chengdu and Shenyang.

Logistics firm Cainiao Network unveiled its biggest chartered fleet on Thursday to cater for overseas customers for the upcoming festival. More than 10 cargo planes will be waiting on the tarmac to carry goods to Europe, the company said.

The logistics arm of Alibaba, which owns the South China Morning Post, has also opened 10 additional global order fulfilment centres in Osaka, Seoul, Los Angeles, Oakland, Frankfurt and Madrid to minimise the time that Chinese shoppers have to wait for their international orders to arrive, said Guan Xiaodong, general manager of Cainiao’s global business.

Industrial Securities expects a total of 1.65 billion parcels to be delivered on Singles’ Day in Chinathis year, the Chinese brokerage said in a recent report.