China-based logistics startup ZTO Freight raises over US$300 million in Series B funding round

The less-than-truck-load logistics startup ZTO Freight owned by Chinese delivery group ZTO Express has raised over US$300 million in a Series B funding round to strengthen its market position.

ZTO Freight did not disclose its investors for the funding round, however, its earlier investors included Chinese asset manager CDH Investments, Sequoia Capital China, and Yunfeng Capital, a private equity firm co-founded by Alibaba Group’s Jack Ma.

The proceeds from this funding round will be used by the company to build new infrastructure, for the research and development of its information system, and hire fresh talent to accelerate and consolidate its development momentum.

ZTO Freight had raised total funding of more than US$100 million in June 2018 in Series A and Series A+ rounds in June 2018 and May 2020 respectively.

China is the largest market for the less-than-truck-load segment. The market is worth more than twice that of ordinary courier services at US$235 billion and it’s still growing.

ZTO Express had experienced rapid growth since its inception and as per company, it boasts a share of 20.4 percent in China’s express delivery market in the year 2020.

ZTO Express and its major competitors including YTO Express, SF Express, and Deppon Express have gained from the rapidly growing domestic ecommerce market.

According to Lai Meisong, founder, Chairman and CEO of ZTO Express, “Market dynamics continued to shift towards higher volume concentration yet clearly divided in relative scale as well as profitability.”

“Volume and market share have been and will continue to be crucial to growth and future of an express delivery business whose winning elements are scale and efficiency. The industry has potentially reached a turning point where competition becomes more orderly, and price begins to stabilize”, said Lai, adding that “expanding market share” remains “one of ZTO’s top most priorties.”

About ZTO Freight

ZTO Freight was founded in 2016 and mainly operated in the Greater China market before it forayed into the global market with an entry in Cambodia in 2020. The startup has added airfreight services as a new offering in June 2020.

The company specializes in one-stop, small-load logistics services for individuals and businesses such as Alibaba and its ecommerce sub-brands, Tsingtao Brewery-China’s second-largest beer maker, and Vipshop-online discount retailer.

It has delivered more than 450,000 tons of packages per day in 2020. ZTO Freight has 3200 trucks, 13,000 delivery and pick-ups, and 72 sorting hubs.