The development of cross-border e-commerce has brought tremendous opportunities for the cross-border logistics industry, with air cargo playing a unique value in the global logistics chain. According to relevant data, less than 1% of goods by tonnage are transported by air in global trade, but in terms of value, 35% of global trade value is transported by air.

From the demand side, the Asia-North America and Asia-Europe routes are the fastest-growing routes in the global airline industry in 2023. Over the next 20 years, demand for passenger and cargo aircraft will be mainly distributed in North America (23%), the Asia-Pacific region (22%), Europe (21%), and China (20%).

From the supply side, Boeing and Airbus expect that by 2042, the global freighter delivery volume will exceed 2,800 aircraft, with approximately 650 large wide-body aircraft capable of intercontinental operations.

Air cargo-enabled logistics solutions play a significant role in the global logistics chain, not only enabling fast fulfillment but also creating value for customers more efficiently. This is also the reason why Vanbanda focuses on air cargo transportation and specialized routes.

In 2023, Vanbanda processed a total of 50 million small package orders, with air cargo volume exceeding 30,000 tons, completing over 80 charter flights. The peak fulfillment capacity exceeded 4,000 tons per month, with the marketing center managing nearly 4,000 active customers with a team of 30 people. The global daily active supplier partners reached 200.

However, since 2017, under the tide of the times, Vanbanda, like many small and medium-sized enterprises (SMEs) in the industry, has experienced many perplexities and challenges, such as:

1. Single product offering.

2. Traditional organizational structure.

3. Significant market fluctuations.

4. Lack of planning.

5. Outdated retrospective mechanisms.

6. The rapid development of the industry has kept us constantly engaged in frontline operations, leaving insufficient time for thorough retrospection and reflection: What did we do right? What did we excel at? Is performance the only tool for evaluating value?

7. Lack of tools.

8. Although the cross-border logistics industry appears to have achieved digitization, it is only superficial. There is still much room for improvement in the processes and standards of digital management.

9. Inadequate financial management.

Based on these pain points, we have made many attempts.

1. Strategic Analysis

Industry/Customer Pain Points: Whether it's giant corporate clients like Temu or TikTok, or small family-run shops with just a few people, the pain points lie in cost and quality.

Target Market: First, start with familiar markets. Second, consider global consumer purchasing power and focus on markets with long-term value. It's not just about the quantity of packages in the market, especially since the global economy is still in a recovery phase. Countries with high GDP and consumer purchasing power are worth deep cultivation. For example, while the Southeast Asian market is currently very active, it's advisable for small and medium-sized enterprises, given limited finances, resources, and manpower, to engage in retail logistics in countries/markets with high economic purchasing power, thereby fully leveraging their capabilities.

Target Products: Focus on multi-product solutions for specific countries and quickly develop solutions tailored to any country

Procurement Strategy: Procurement strategies involve group purchasing, individual purchasing, chartered flights, fixed contracts, as well as supplier and market cooperation. Air freight is a scarce global resource, so proper procurement planning is crucial.

Risk Control: Besides cost and quality, supply chain logistics resource management companies also need to pay close attention to cash flow.

2. Management Innovation

(1) Organizational Fission: Transitioning from the traditional independent departmental structure to a model consisting of a business front and multiple mid-level platforms. The business mid-level platform is primarily responsible for product and resource acquisition, while the support mid-level platform covers human resources, technology, operations, finance, and supplier management. The data mid-level platform consolidates data from across the entire company.

Organizational fission significantly improves efficiency. Based on the mid-level platform architecture, teams can quickly respond to front-end demands. The business mid-level platform can also handle all products and ensure rapid product launches, while the support mid-level platform can provide ongoing support and assurance as the business expands.

(2) Operational Budget Management: Operational budgeting requires foresight. Managers need to anticipate which markets the company will enter, the scale of operations, required funding, resource allocation, and projected business volume. It's essential to plan operational budgets in advance every year.

3. Agile Decision-Making

(3) Establishment of Project Teams: Numerous project teams have been introduced internally within the company, linking both mid-level and senior-level management to projects. This approach allows us to quickly respond to front-end demands based on the mid-level platform architecture, as it's not feasible for the enterprise to continuously allocate resources to problem-solving.

Agile decision-making involves setting annual plans in the fourth quarter of each year. Before mid-December, the entire group holds a meeting to establish the operational budget for the following year, which is then strictly adhered to. There's a regular review mechanism in place, monitoring costs, expenses, gross profit, and net profit on a weekly basis. Business reviews align with business strategies, ensuring unified development across business, product, and resource strategies. Attention isn't solely on business operations but also on quality, cost, and standards compliance, leading to operational reviews.

The establishment of an in-house database and business intelligence (BI) mechanism allows real-time monitoring of market information across multiple dimensions. Besides macro-level information, understanding market supply and demand dynamics, such as where giants like Temu and Shein plan to invest this quarter, impacts freight market rates. Simulated trading based on this data is conducted. Through a robust BI mechanism, weekly operational budget reviews are conducted to supervise the alignment of strategies and action plans.

4. Automation

In 2022, when Temu was still issuing invoices daily, Wanbang took on Temu's business, but at that time, there wasn't much perceived change in the market. It wasn't until early 2023 that the entire industry experienced significant changes in parcel volume and parcel forms due to platforms like TEMU and TIKTOK.

Wanbang was the first domestic cross-border logistics company to introduce automated sorting lines, but the early investment in sorting lines was mainly suitable for parcels weighing below 1 kilogram. So, when these changes were noticed, rapid research was conducted, and some automated equipment was upgraded. However, after the upgrades were completed, cross-border e-commerce entered the era of full outsourcing, with platforms starting to segment logistics procurement, further driving us to enhance our automated operational capabilities.

5. AI Big Data

Computers calculate more clearly and accurately than humans. Many pricing mechanisms, including some customer requirements standards, can be rule-based. Wanbang's AI big data standards are becoming increasingly clear, with more and more data warehouses and business visualization achieved through BI. At the same time, there are predictive models that can simulate risk and return.

Many small and medium-sized enterprises are still concerned about funding issues. Sometimes, it's not necessary to finance to obtain funds. As long as we focus on business, financial management, and financial reporting, many banks in China strongly support the development of enterprises. However, we need to understand their processes and become a professional company.

We are now in a very good track and time cycle. What we should do is to reduce complaints and truly engage. In the past few years, Wanbang has achieved a 20-fold increase in sales, and air transport capacity has increased tenfold from the beginning to now, but our team has only slightly over two hundred people. Even from 2020 to now, the team has only increased by 30 people.

In terms of team size, Wanbang is also a small to medium-sized enterprise. But as long as we believe the market is good and don't doubt it, learn to solve problems together when encountered, we will still achieve good development. In summary, small and medium-sized enterprises, after understanding the business and track they want to pursue, should digitize and automate effectively, standardize our knowledge and experience, and achieve efficient development for the enterprise.

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Cross-border E-commerce Logistics Bai Xiaosheng