A Software Platform to Support Collaboration in Express Delivery Services

Abstract

INTRODUCTION The express delivery industry has been one of the fastest-growing industries in China, with an average annual increase of over 20% for the past 5 years. In 2011, China's express delivery networks handled some 3.67 billion pieces, ranking 3rd (after the USA and Japan) in number of deliveries for any country world-wide. In value terms, 2011 was a 75.8 billion RMB (USD12 billion) business for the industry (State Post Bureau of China, 2012). According to industry analysts, the surging popularity of China's e-commerce business will result in an increased demand for express delivery services that will far exceed capacity in the next five years. There are 4,036 courier, shipping and express delivery companies in the USA, and the average number of employees per company is believed to be in the range 1,000-4,999 (BizCompare.com, 2013). An average number of employees in such a range suggests that the vast majority cannot be classified as SMEs. In Japan 99.5% of the express home deliveries were handled by the 5 big companies in 2011 (Ministry of Land, Infrastructure, Transport and Tourism, Japan, 2013). In contrast, close to 90% of China's 30,000 express delivery companies are SMEs, see China Association of Warehouses and Storage (2005) and Zhi (2006). China's express delivery SMEs are by definition limited in size, and many do not have sufficient funds to invest in the latest Information Technology. They were originally established as intra-city express providers servicing a defined area or a single city. These SME express companies gradually realized that in order to improve growth, or even survive in the highly competitive express delivery market, they would have to expand their services to inter-city deliveries, otherwise their local market share will eventually be lost to the larger inter-city companies, which includes many of the well known large multinational delivery names. This is the main reason why many of the SME express companies located in different cities have had to collaborate by engaging in a mutual sender-forwarder relationship, and thus effectively enabling them to enter the inter-city market. In comparison with local deliveries, in 2011 inter-city deliveries were 3.3 times the volume and 6.7 times the value (44.59 items and 6.59 billion RMB), see State Post Bureau of China, 2012. However, as such pair-wise collaborations have created problems in terms of both efficiency and security. There appears to be two main reasons as to why these problems have arisen: * Most of the collaborative systems used are inadequate, mainly because a pair-wise collaboration involves only one company in each city and service standards may be neglected because of an absence of competition. * Comprehensive software appears to be lacking that can support such collaborative operations and at the same time provide (1) the necessary online freight tracking services and (2) adequate performance measurement mechanism to capture actual daily service performance and turn into comparable credits. OBJECTIVE AND RESEARCH METHODOLOGY It is clear to the authors that China's express SMEs can benefit by establishing and maintaining collaborative networks of alliances in each city; and this provides the impetus for this paper, in which we propose an agent-based software platform to support the collaborative networks of express SMEs in China. The agent-based system developed will also be able to serve as an e-business portal, and will facilitate the formation of alliances of companies amongst the collaborating express SMEs. The system should also enable SMEs to provide more reliable and efficient inter-company forwarding for door-to-door inter-city express delivery services, and all this should in turn enhance their ability to compete with their larger rivals. Our research began by studying the current collaboration practice and the major issues faced by the SMEs express delivery companies in China. …