China’s ZTO Express Testing Out Drone Deliveries

ZTO Express, a leading express delivery company in China — and one of the largest express delivery companies globally — believes that using drones to deliver goods in rural China is possible, but licensing from the government needs to happen first.

In an interview with CNBC, CFO James Guo revealed that ZTO’s latest drone delivery tests “went well.”

“We just completed our testing of drone use a few months ago,” he said. “This is still at the trial testing period because we need to get a license from the government in order to use drones for commercial [purposes]. But the testing went well, because we successfully reduced delivery time by about 60 percent.”

Guo went on to say that drone delivery could be especially helpful for Chinese shoppers in rural areas, improving overall accessibility of Chinese businesses to those remote areas, as well as reducing losses and delivery times for the entire network.

In an industry that has become increasingly competitive, Guo noted that ZTO Express has worked to differentiate itself from its competitors.

“One way is that our network is more stable. And as long as we continue to provide quality services to the merchants and consumers, the business will come,” he said. “Over the past seven years, we have successfully increased our market share from about 7.6 percent back in 2011 to over 15 percent in 2017.”

Back in 2015, it was reported that Alibaba was conducting three days of drone tests, including one that would fly from a warehouse on the eastern outskirts of Beijing to the China World Trade Center in less than an hour. Alibaba partnered with Shanghai-based YTO Express for the test runs.