STO Express, a prominent Chinese courier service, has established a strategic alliance with Cainiao, the logistics arm of Alibaba. This collaboration aims to accelerate the adoption of autonomous vehicles for last-mile delivery.

This initiative comes after STO Express’s announcement in late June, when it disclosed plans to introduce 2,000 autonomous vehicles into its operations within the year.

The partnership will focus on large-scale deployment and the joint development of new vehicle models and operational approaches suitable for various delivery scenarios.

🔗 Source: 36Kr

🧠 Food for thought

1️⃣ China leads global autonomous delivery race with significant commercial deployments

The Shentong-Cainiao partnership represents China’s continued leadership in autonomous logistics, where commercial applications are already becoming widespread.

China leads in autonomous truck deployment globally, with companies like Inceptio Technology delivering 400 self-driving trucks to ZTO Express, another major courier service 1.

This push toward automation responds to the explosive growth in China’s smart logistics market, which exceeded 400 billion Yuan in 2018 and is projected to reach 1 trillion Yuan by 2025 2.

Chinese companies like Neolix claim to be the first to mass-produce autonomous delivery vehicles and already have vehicles operational in economic zones across China 3.

These deployments often focus on specific use cases like Shentong’s last-mile delivery application, allowing companies to refine technology in controlled environments before wider implementation.

2️⃣ Scale is crucial for commercial viability in autonomous delivery

Shentong’s ambitious goal to deploy 2,000 autonomous vehicles by year-end reflects an industry understanding that scale is essential for profitability in this sector.

Chinese autonomous vehicle manufacturer Neolix prices its units at 40,000-50,000 Yuan (approximately $5,500-$6,900) with an additional AI service fee of 7,000 Yuan quarterly, making large fleets more economically viable through operational cost savings 4.

This economies-of-scale approach aligns with industry projections that the global autonomous delivery robot market will reach 4.7 million units by 2032 5.

By operating a large fleet, Shentong can amortize technology development costs while generating sufficient data to improve AI systems and route optimization, which is critical for the “replicable and scalable smart delivery solutions” mentioned in their announcement.