Physical Distribution Network

The physical distribution network aims at meeting the needs of expanding postal services and building modern postal routes. Up to now, a dimensional physical distribution network with the state-of-the-art information platform has been formed, covering the whole country and reaching the rest of the world by the integrated means of air, railway and truck transportation. By the end of 2005, China Post has had 21,000 postal routes nationwide, of which 1,651 are for planes, 108 and 162 ClassⅠtrunk routes for trains and trucks respectively. The year 2005 witnessed major headway in strengthening the core competitiveness of the physical distribution network, which served as strong support for the development of postal industry.

In 2005, the transportation capability of trunk routes was dramatically enhanced by using cargo and mail trains and implementing the strategy of expanding to the west, thus greatly relaxed the contradiction between the transporting capability and capacity and alleviated the intense situation in the western part of the nation. Moreover, the delivery time limit sped up and the operation cost was cut down sharply. In addition, the interconnected network linking Beijing, Shanghai and Guangzhou for cargo and mail trains was established, which brought the advantage of cargo and mail trains into full play.

Great efforts were also made in accelerating the pace of containerized transportation on the trunk truck routes. The year 2005 saw the opening up of another 12 ClassⅠtrunk routes for containerized trucking (e.g. Shanghai-Hangzhou, Shanghai-Nantong), taking Shanghai as the hub. Up to now, there are altogether 26 ClassⅠtrunk routes for containerized trucking in China. With the application of container transportation, the efficiency of mail sorting and dispatching was increased and the shipment quality improved. Meanwhile, the labor intensity of loading and unloading during transit was relaxed and therefore, the processing time has been greatly shortened.

The Overnight Flight network was further consolidated and expanded to spur the development of EMS business. With the introduction of another 2 Boeing-737 cargo aircraft, a self-operated air express network was formed, taking Shanghai as the major distribution center and Wuhan as the supporting center. The network covered over 200 cities in 30 provinces (autonomous regions and municipalities directly under the Central Government). There were 4 Boeing-737 cargo aircraft, 5 YM-8 aircraft, 12 self-run flight routes and 48 ClassⅠtrunk routes for trucking. The operation of the Overnight Flight network enhanced the core competitiveness of China Post and encouraged greatly the growth of the EMS business.

The year 2005 witnessed the operation of logistics distribution network in southwest and northwest China with a coverage of over 31 cities and 1800 plus counties in 31 provinces (autonomous regions and municipalities), marking the initial establishing of the platform for the postal logistics distribution nationwide. The operation of this network enabled China Post to be a domestic enterprise with a scaled, computerized and comprehensive express transportation network. The establishment and improvement of the logistics platform provided more opportunities for the postal logistics services. With the operation of the distribution network, the LTL business of China Post was further developed to an impressive degree. The inter-provincial volume of LTL business increased by nearly 80% over the previous year.

The success of speeding up the distribution of best-selling newspapers and periodicals further met the needs of the market competition. Starting from August 1, 2005, the delivery time of 640 kinds of best-selling newspapers and periodicals with the revenue accounting for 42% of the nation's total was accelerated in 138 cities, focusing on 10 major cities, including Beijing and Shanghai. Following the speeding up, the delivery time was shortened and the market share of postal distribution of newspapers and periodicals was further strengthened and increased. Some press agencies even transferred their distribution service to China Post which earned remarkable social and economic benefits.

The second-phase construction project of the two subsystems (i.e. the operation system of mail centers and the control and dispatching system of mail transport) was accelerated and the scientific management level of postal routes operation was further improved. Computerized information transmission, bar code application in mail processing and paper-free mail exchange have been achieved on the ClassⅠtrunk routes. The new operation mode for dispatch processing and transit was formed, featuring barcode scanning and checking. With this new operation mode, the percentage of the dispatch which can be read by scanners increased from 39% to over 99% and the percentage of the outbound dispatch which can be scanned and checked automatically increased from 15.8% to over 97%. Thus the quality of the whole network was greatly improved.