When JD Logistics debuted on the Hong Kong Stock Exchange, chief executive officer Rui Yu said “This IPO allows JD Logistics to enter a new stage of development, and also symbolizes taking on more social responsibility. In the future business scale and people organization will change, but the ‘customer first’ philosophy certainly will not. Business logic based on experience, efficiency and cost will not change. Adhering to the ‘noble principle of doing the right thing the right way’ also definitely will also not change.”
One year on, JD Logistics has proven its continued dedication to Yu’s statement. On March 10th, the logistical arm of the technology and supply chain service company JD.com announced the first annual financial results since its initial public offering on March 28th, 2021, reporting a 42.7 percent growth year-over-year with total revenues reaching $16.45 billion. By December 31st, 2021, JD Logistics was operating over 1,300 warehouses, 7,200 delivery stations and employed over 200,000 in-house delivery personnel.
Perhaps most notably, over half of JD Logistics’ total revenue in 2021 was derived from external customers, indicating the company’s continued growth as a provider of supply chain solutions outside of its own retail business. The number of JD Logistics’ external integrated supply chain grew significantly, experiencing a growth rate of 41.7 percent when compared with 2020 totalling over 70,000 customers. It also provided services for over 300,000 industry-leading customers including Xiaomi Youpin, Cheers, Volvo Group, Chemical Industry Group and Shaanxi Coal amongst others. It has also been working to develop customized solutions for middle-sized businesses in sectors such as fast-moving consumer goods, retail, and the 3C industry (computers, communications, and consumer electronics).
The company also experienced strong growth in international markets, with 2021 seeing JD Logistics open automated warehouses in six countries including the United Kingdom, the United States, Australia and the Netherlands, and the total number of bonded and overseas warehouses had reached almost 80 by year’s end. In the Netherlands, its warehouse is utilized by the European ready-to-wear brand Hunkemöller for a full range of B2B and B2C services in addition to fulfilling orders for the Netherlands, France, Belgium and Luxembourg with AGV (automated ground vehicle) robots. 2021 also saw JD Logistics launch new cargo flights from China to Thailand, the United States and the United Kingdom, allowing it to provide door-to-door transportation service in as fast as 48 hours.
JD Logistics has made technology a key differentiator for its logistical services, with applications of innovative technology present across its supply chain solutions allowing it to automate services, digitalize operations and foster intelligent decision-making. Focusing heavily on research and development, in 2021 it invested over $400 million in technology innovation, a year-over-year increase of 37 percent. By the end of the year JD Logistics had applied for more than 5,500 patents and software licenses with more than half of them being related to automation technology and unmanned technology. In the company’s “Asia No.1” smart warehouses located in Changsha and Beijing it began piloting 5G technology, and overall nearly 400 Level-4 autonomous delivery vehicles were activated for daily use in last-mile deliveries across the country.
Unparalleled logistics has been a defining strategy for JD.com since its earliest days as a company. Founded in 2003 by president and chief executive officer Richard Liu, it was in 2007 that he made the decision to move away from third party logistics services and bring the entire network, fulfillment centers, and warehouses in-house. In addition to having more control over the quality of service delivered and differentiating himself from competitors, Liu’s childhood growing up in rural China made him uniquely aware of the demand for access to products in places that had previously been neglected such as third and fourth tier cities, as well as rural communities.
The transition was a massive undertaking, requiring a large amount of capital for hiring delivery drivers, purchasing land and building warehouses, in addition to bringing on a team who had the ability to design and implement the infrastructure. Many predicted that the business model would require too much overhead to ever be successful, but through a commitment to service and a focus on technology JD’s logistical capabilities have proved those assumptions incorrect.
In 2010, JD.com became the first e-commerce company in the world to launch same-day and next-day delivery service, and today covers 99 percent of China’s population. JD Logistics has the ability to deliver over 90 percent of orders either same-day or next-day in 2015 launched a research lab to develop smart logistics and unmanned technology, and in 2017 JD Logistics was officially established as a separate business group. This began the next phase of development for JD Logistics, as it created another stream of revenue by opening up its supply chain and logistical capabilities to third parties and allowing it to eventually go public.
2022 has seen a number of further developments come from the minds of those at JD Logistics. Recognizing the fast-growing electric vehicle (EV) industry across the globe, the company’s one-stop service platform JD Service Plus has begun to offer supply chain solutions for charging pools, the infrastructure for charging multiple electric vehicles at once.
EV charging pool solutions just adds to a growing number of services provided by JD Service Plus, including installation, repair and cleaning for electronic products; home appliances and furniture; maintenance for bags, shoes and clocks; and eliminating dust mites, air quality tests, and air purifying services amongst others.
Providing storage, delivery, installation and after-sale services, JD Service Plus has partnered with some of the global leaders in electric vehicle manufacturing such as Volkswagen, Tesla, Audi, XPeng, Voyah and Aiways for charging pool services. Through its work with these companies, it has increased the regional installation efficiency by 15 percent while also receiving a satisfaction rate of 98 percent.
The electric vehicle industry has the ability to ease fossil fuel usage, reduce carbon emissions and improve air quality, and JD.com has also committed to a greener future within its own operations. In 2020 Richard Liu announced the company’s new mission statement to be “powered by technology for a more productive and sustainable world,” and that year stated it intended to reduce its carbon emissions by 50 percent by the year 2030.
On March 9th, 2022 JD.com announced that the company’s Asia No.1 smart logistics park located in Xi’an had been certified as carbon neutral by the China Beijing Environment Exchange and the Centre Testing International Group, the first to be established in China. Opened in 2019, the park generates renewable energy for its operations through the use of 100,000 square meters of rooftop solar panels. It has also implemented a number of other green improvements to its sorting and transportation processes including utilizing distributed air conditioning to heat the building rather than boiler rooms, and implementing new energy in special equipment and terminals.
By the end of 2021 JD Logistics had installed photovoltaic solar panel systems at 13 of its logistics parks and aims to utilize green energy at 85 percent of its warehouses within the next three years. The next carbon neutral warehouse is set to be the Asia No.1 located in Suqian by 2023.
After a stellar first year with strong results in 2021, JD Logistics has already shown through its achievements in 2022 a continued commitment to JD.com’s overall mission statement, working to employ technology and create a world that is both more productive and sustainable.