Singles Day will change global logistics

Although many in the West have little understanding of what ‘Singles Day’ is, its emergence is an important part of the changing structure of global trade. It has profound implications for demand planning in the logistics sector.

For several decades container shipping, air freight and other parts of the logistics sector have been dominated by the ‘peak season’, itself driven by the spike in consumer demand around Christmas. The emergence of other events such as ‘Singles Day’ are likely to affect this demand pattern.

Singles Day in China is an unofficial holiday popular amongst young people and characterised by the purchase of gifts. It has triggered vast activity within internet-retailing in China. Although the numbers around this are hard to substantiate the largest internet retailer, Alibaba, has announced that its sales for this year’s Singles Day have been greater than $38bn.

It is notable that Singles Day is largely an internet phenomenon. This is for several reasons, but it is particularly driven by young people’s orientation towards mobile phone based commercial activity. e-retailing also has a greater ability to market imports from outside China, with vendors able to create a web presence that directly advertises their product to Chinese consumers. This is attractive to Chinese consumers drawn to products made outside of China but which conventional retailing struggles to sell.

Internet retailing is colossal in China, possibly twice the size of that of the American market with sales estimated to be over $1tn. Not only has it created very large internet retailers such as Alibaba and, its scale is what underpins the Chinese Express parcels sector with the latter having the potential to rival the US Express carriers in the not so distant future.

The implications for shipping patterns and seasonality of events such as Singles Day and its ilk are substantial. The Chinese consumer’s appetite for foreign products is likely to drive demand for trades into China not just for container shipping but also for air freight and road freight. The pattern of vessels running empty for return journeys from North America or Europe may become a thing of the past.

Source: Transport Intelligence, November 12, 2019

Author: Thomas Cullen