Look Toward "New Logistics" | Voice

4,140 words, 10-minute read

By Yanchen Liu, Partner at Heart Capital

The logistics world has been buzzing lately. The Red Sea crisis has sent ocean freight rates soaring, Robotaxi has become a hot topic domestically, and Robovans are now speeding down highways. Yet this flurry of activity hasn't exactly breathed new life into logistics investment and financing.

But we've never wavered in our conviction about logistics. Powered by new energy and digitalization, the electrification and intelligentization of hardware is an unstoppable trend — and hardware upgrades often drive business model innovation. That's why we're bullish on the broader new energy and new mobility sectors, convinced that technological progress will bring fresh models, new experiences, and even entirely new giants to logistics.

Looking back, I spent years in the investment department at Cainiao, and among my most unforgettable experiences was getting a firsthand taste of how hard logistics workers have it. I still remember pushing carts for ten thousand steps a day in sweltering warehouses, doing putaway, picking, packing, and shipping; sorting mountains of packages at campus stations during Singles' Day; taking inventory in cold chain warehouses wearing down jackets; and riding along with truck drivers to factories to pick up cargo. The engine rattled so loud in the cab you had to shout to be heard. One driver kindly shared an apple with me. That cab was his home — thermos, dry rations, the back seat converted into a makeshift bed.

There were moving moments, and exhilarating ones too. At express sorting centers, watching packages fly by on whirring conveyor belts, I'd marvel: without this automation, how could we receive our orders so quickly? Seeing hundreds of AGVs shuttling through warehouses — the technological spectacle rivaled anything in European or American facilities. I once visited Russia to see their much-touted parcel lockers, only to find their equipment costs were three to four times ours. Most memorable of all was riding in a pure electric heavy truck. The driver grinned, "This is great, it's quiet — I can finally listen to music while driving."

These precious experiences gave me a uniquely grounded industry perspective, and a deep appreciation for logistics' vastness and complexity. Frontline logistics workers toil tirelessly and quietly, and technology truly can — and is — changing their fates. Some have said the logistics industry is already dominated by giants, leaving slim pickings for entrepreneurs. I disagree. There's always opportunity, waiting for those with the eyes to see it.

The evolution of logistics is inseparable from the evolution of commerce. Over the past decade, as China's economy boomed and e-commerce surged, logistics was propelled to new heights. Express delivery and less-than-truckload shipping have developed into multi-giant competitive landscapes, with scale and efficiency that lead globally. Take the express franchise network model: this innovation enables hundreds of millions of parcels to be automatically sorted through assembly-line operations at distribution centers every single day.

Logistics has also been driven by advances in software technology. Over the past decade, the deep integration of internet and industry has spawned more efficient, more intelligent business models. Full Truck Alliance, for instance, uses an online platform to achieve precise matching of trucks and cargo, dramatically improving transport efficiency. World Logistics has focused on digital transformation in cross-border ocean freight, working to boost container shipping efficiency.

Progress in logistics equally depends on hardware upgrades. Over the past decade, technology hardware has advanced rapidly, with widespread AGV/AMR adoption as a prime example. The emergence of warehouse robotics companies like Geekplus, Hai Robotics, and Cloud Whale has not only elevated warehouse automation but also introduced "human-machine collaboration" operating models to the industry.

The core logic behind these companies' success lies in their full utilization of the advanced productive forces of their time — internet plus. These forces didn't just deliver unprecedented e-commerce experiences to consumers; they also became darlings of the capital markets.

What are today's new productive forces? Undeniably, generative AI, next-generation energy technology, next-generation computing power, next-generation communications, and other breakthrough innovations.

These new productive forces are driving rapid transformation across commerce, software, and hardware: 1) Commerce is becoming multi-channel and diversified — livestream e-commerce, cross-border e-commerce are surging, even production and trade chains are shortening, small-batch quick-turnaround is trending, and logistics is adapting to these shifts; 2) Digital twins, AI workers, process automation and more are dramatically cutting costs and boosting efficiency; 3) Unmanned vehicles, drones, unmanned ships, eVTOL, embodied intelligence — these will no longer be distant dreams.

When technological achievements combine with logistics scenarios, the industry will burst with entirely new vitality. This is opportunity for startups, and a chance for incumbents to transform and upgrade. I've seen many entrepreneurial projects fall into two extremes: either they talk only about technology, or only about logistics. Yet to build a successful logistics technology company, you must possess both — invest the time to deeply understand real-world scenarios, explore genuine pain points and needs with frontline customers, and actively embrace technology as the golden key to the future. Cross-disciplinary collaboration between scientists and logistics experts will unleash boundless innovative potential.

Starting a business today may be more challenging than in the past, but it's far from impossible. Across the many success stories we've witnessed, one observation stands out.

Start Small, Not Big

Logistics is unquestionably a massive market. For every 10 yuan of China's GDP, roughly 1.5 yuan comes from logistics. Put another way, logistics costs still account for about 15% of GDP — roughly double that of Europe and the US — meaning vast opportunities remain to be tapped.

Faced with such scale, chasing comprehensiveness from day one rarely works. Nearly all successful startups begin in niche markets, then expand. So choosing the right small scenario to切入 is crucial. Grow into a big fish in a small pond, then expand to other ponds. For example:

In tech: Amazon started with books; PayPal began serving eBay power sellers; Facebook launched from Harvard's campus.

In logistics: CH Robinson grew from an American agricultural products brokerage into the nation's largest transportation platform; SF Express started with Hong Kong road freight and became a comprehensive logistics group; Full Truck Alliance began digitizing trucks in Jiangsu Province and is now China's largest online truck-cargo matching network.

Within logistics' vast market, scenarios abound. Broadly: transportation (~8 trillion RMB); warehousing (~5 trillion); supply chain (~3-4 trillion). By logistics element: warehouse operations, ocean freight, road freight, air freight, last-mile networks. By business model: B2B and B2C. By geography: regional, domestic, cross-border, overseas. By industry vertical: e-commerce, general trade, FMCG, 3C electronics, cold chain, bulk commodities — each tied to its underlying commerce flow. By hardware: vehicles of every kind, three-wheelers, two-wheelers, aircraft, ships, robots, conveyors, robotic arms. By infrastructure: real estate, system software, data. With such richness, start from one small opening and you have a shot at gradual growth, even becoming a global giant.

Good Tech Is Tech That "Pencils Out"

The essence of logistics is service. Customers' most basic need: get goods delivered safely and reliably. Logistics also has a distinctive trait — it's notoriously "cheap." Every year, customers "force" cost reductions. Even the most pedigreed teams need to roll up their sleeves, prioritize cost, and avoid reckless spending. Logistics companies typically serve as "vendor" to clients, so they must provide quality service and good experience. Those serving logistics companies are essentially vendor's vendor — they need even sharper capabilities to get "cheap" logistics firms to open their wallets.

In logistics technology, "latecomer advantage" often proves more reliable than "first-mover advantage." The core reason: only as technology becomes more accessible over time does "the math work." For a logistics company, if hiring one worker can replace a 100,000-RMB robotic arm, they'll never spend that money.

Take unmanned delivery vehicles. They used to cost hundreds of thousands each; now, as technology matures and core sensor prices drop, costs have fallen to the low tens of thousands, making the ROI calculable. Today, we're seeing unmanned delivery vehicles increasingly in communities, campuses, even on public roads. Yet unmanned vehicle technology has been around for years.

Currently, many logistics technology companies going overseas benefit significantly from our products' dual advantages in price and performance. So "the math works" in overseas markets. But abroad, you're competing not just on price, but also on channels, market access, and service.

"Logistics Technology" or "Technology Logistics"?

In examining the distinction between "logistics technology" and "technology logistics," we see digitalization, intelligence, and unmanned operations leading logistics' future. Traditional logistics businesses typically have low gross margins — a fleet might see 10%-15% gross margin, with net margins even slimmer. But by using internet technology to integrate resources, truck-cargo matching platforms can lift gross margins above 50%, with net margins exceeding 20%. Digital freight platforms, through digitalization and quality service, achieve gross margins far above traditional fleets. Technology integration not only dramatically boosts logistics efficiency and corporate profits, but also raises customer satisfaction.

Technology development requires an innovation process from technology to product. True disruptive innovation is a systems engineering challenge — surrounding infrastructure must catch up to maximize its advantage, often taking years or even decades. The shipping container was invented in 1931, but took decades of industry maturation to become a global standard. Airplanes existed long before FedEx's 1971 founding finally applied all-cargo aircraft to parcels and letters.

When technology companies enter logistics, the challenge is converting technological advantage into actual operational capability. In Europe and the US, M&A among logistics firms is frequent — not just scaling up quickly, but acquiring customers and supplementing operational capabilities. Collaboration and mergers between technology companies and logistics firms are worth exploring. Tech companies bring foresight and high valuations; logistics firms bring clear scenarios and industry operational depth. Such combinations are genuinely complementary. Enterprise valuation is the discounted value of future cash flows; the ability to boost future cash flows through technology application raises a company's valuation accordingly.

Future logistics companies will more likely take a "technology logistics" form. In this moment of AI breakthroughs, we all imagine robots fully replacing humans in tedious work. But without robust enterprise digitalization, without business process adjustment, without changes to overall corporate governance structure, AI and robots cannot truly perform. That is, we shouldn't expect some all-capable robot to suddenly emerge and disrupt the industry. Innovation lies not merely in hardware itself, but first in building organizations most adaptable to new technology and new hardware. This is the opportunity window for startups — incumbents are too large, where any change in one link may affect the whole body. Startups can travel light, becoming AI logistics companies from day one.

Over recent years, rising penetration of industrial digitalization has made data element acquisition more accessible. Meanwhile, massive cost reductions in smart sensors have further lowered costs for advanced intelligent entities like robotic arms, robots, even unmanned vehicles. So we can optimistically foresee: in the next 3-5 years, the "black tech" we've long coveted will become more stable and durable technologically, with costs continuing to fall and gaining wider customer acceptance. Then, "technology + logistics" will become the industry's new normal.

Today's capital market is undergoing unprecedented adjustment. Those willing to start businesses now must be driven by "true love." Return to original intent, create genuine customer value — this requires not just deep insight into demand, but persistence in logistics and conviction in technology.

Look toward "new logistics." Because we believe, we see.

Yanchen Liu

Partner, Heart Capital

Yanchen Liu is a Partner at Heart Capital with 15 years of venture capital experience, focusing on new mobility and digital logistics investments. Her portfolio companies include RoboSense (2498.HK), World Logistics, De Well Holdings, 4PX Logistics, Best Inc. (Best.US), 8482.TW, Meilele, and others.

Prior to joining Heart Capital, Liu was Investment Director at Alibaba Group's Cainiao Network, Vice President at CDIB Capital, and previously worked at ING Group Hong Kong and Deloitte Hong Kong.

Liu holds an MBA from University of Chicago Booth School of Business (with honors), and BBA degrees from Shanghai Jiao Tong University and City University of Hong Kong (first class honors). She is an ACCA Fellow.

Founded in 2022, Heart Capital is an early-stage venture capital fund focused on technology and digitalization in China. The team is led by Yan Han, founding partner of Lightspeed China, alongside core investors, a CFO, and seasoned industry investors. The team's past investments include Series A investments in Xpeng Motors (NYSE: XPEV, 09868.HK), Full Truck Alliance (NYSE: YMM), as well as FinVolution (NYSE: FINV), RoboSense (02498.HK), Baichuan, Yunmanman Cold Chain, Fan Deng Reading, World Logistics, Micro-nano Star Space, LandSpace, Lanhu, Starfield, and others.

Heart Capital is rooted in China with a global outlook, committed to finding true value in non-consensus. It respects the value of "people" and champions the potential of "heart," looking forward to accompanying more young Chinese entrepreneurs to strengthen China and go global.