Question · Q3 2025
Lin Mujin asked about potential cost pressures in 2026 if the anti-involution policy continues, leading to lower-than-expected volume growth, given 2025's capacity investments. He sought ZTO's outlook on cost improvement for 2026. His second question concerned whether the focus of price competition would shift from lower-kilogram parcels to higher-kilogram segments, following the setting of floor prices for smaller parcels in major markets.
Answer
Chairman and CEO Meisong Lai acknowledged ZTO's historical cost advantage in transit, which is narrowing as peers invest. He emphasized that ZTO's total cost optimization extends beyond transit to collection and delivery, citing the "3+1" work at outlets. He expressed confidence in maintaining cost leadership through digitalization, smart investments, and optimizing each segment of the end-to-end process, despite potential narrowing in transit cost advantages. Regarding competition, Mr. Lai confirmed that the anti-involution policy and price recovery are reducing the proportion of light, low-ASP parcels. He stated ZTO would adjust resource allocation based on regional capacity, potentially making adjustments in higher-kilogram segments in regions like the middle and western parts of the network. He reiterated confidence in balancing market share, quality, and profit, aiming for a more prominent leading edge in competitive advantage. CFO Huiping Yan elaborated on ZTO's historical cost efficiency, noting that while transit cost advantages are converging, the focus is now on end-to-end cost reduction across all four segments (collection, transit, sortation, delivery). She highlighted investments in technology, automation, and network partner efficiency (e.g., "three plus one effort") to maintain cost leadership. For the shift in parcel mix, she stated ZTO would appropriately allocate resources based on network capacity, potentially adjusting policies for higher-weight parcels in certain regions, and remains confident in managing this shift while balancing volume, scale, and profit under high-quality service.
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