ZTO Express (NYSE:ZTO) Q1 2020 Earnings Conference Call - Final Transcript

May 20, 2020 • 09:00 pm ET

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ZTO Express (NYSE:ZTO) Q1 2020 Earnings Conference Call - Final Transcript

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Executive
Meisong Lai

categories. On the other hand, the express delivery industry responded quickly to provide the logistics support with an ample capacity reserve. Since resuming operations in late February, observing a positive trend of growth, we took comprehensive measures surrounding our core strategy of accelerating parcel volumes growth, reaching our competitive lead, and further expanding our market share through coordinating efforts of central office and the provisional headquarters.

First, we reset our volume growth for the upcoming three quarters, distributing targets to each level of responsible limits. We reinstitued incentive policy caters to differentiated market conditions such as pickup versus delivery and the customer makeup, and mobilizing entire network's responsible competitions more effectively. We've broadened high capacity vehicles, further optimize the engine-to-trailer ratio and improved the supply mix to minimize use of third-party trucking. Centrally dispatched and coordinated route selection, excess capacity and low demand so as to maximize utilization and acquire incremental volumes. By leveraging our strong cash reserves and diverse financing potential, we eased the liquidity pressure and helped the capex funding with number of qualified network partners with solid market potentials in some operations. Depending on a level of targeted business [Phonetic] this network partners were awarded with varying degrees of subsidies. We continue to encourage our network partners to secure first-mover resource for establishing last-mile capabilities. This will not only help contain last-mile costs better for established potential connection with consumers.

We increased efforts to further empower front line personnel to be self [Indecipherable], to work more efficiently, such as recognizing stock performance, reinforcing standardized pickup and delivery fee schedules, and upgrading technology and operating tools. We strengthened the central quality monitoring and control mechanisms for accountabilities and improved the responsiveness. With development and application of technology, ZTO has gradually shifted from a KPI oriented mindset to a management approach that pays more attention on standardized operation and process, relying on data tracking and outcome measurements. ZTO is building a digital workspace that would integrate business operations, financial management and data analytics, which is becoming more in a more capable of supporting decision making, process monitoring and in-time modification to ensure strong execution of our strategy.

While the COVID-19 outbreak leveraged tremendous challenges, it also brought about new opportunities. Manufacturing, consumption and even lifestyles are rapidly changing, according to the statistics from the China Internet Network Information Center, as of March 2020, there were more than 900 million Internet users in China, of which over 700 million were online shoppers. New marketing practices, such as live streaming and virtual community wholesale are trending. The explosive growth of the digital economy has become a new growth engine. Express delivery will play an increasingly important role to connect the consumers and producers. We firmly believe that ZTO is well positioned to break through and seize the opportunity, since we have well established a corporate values, a more capable team and strong use of capital reserve as well as the most efficient operations and the most stable Internet network.

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