China Route Optimization Software Market Size, Share, Opportunities, COVID-19 Impact, And Trends By Product (Software, Services), And By Application (Food Delivery, Ride-Hailing Services, E-Commerce, Others) - Forecasts From 2022 To 2027

The China route optimization software market is evaluated at US$0.829 billion for the year 2020, growing at a CAGR of 14.44% reaching the market size of US$2.133 billion by the year 2027.

Route optimization is a technique or method used to find the quickest and most cost-friendly route among several available routes. The optimized route is concluded based upon metrics like the number of stop locations and time taken for each delivery spot between the start and end of the route. The Chinese market for route optimization is projected to witness exponential growth, majorly owing to the large e-commerce presence in the country. Also, logistics expansion and distribution network optimization in the country are further anticipated to propel the growth of the route optimization market. In May 2020, the Politburo Standing Committee of the Chinese Communist Party (CCP) put forward the dual circulation policy for internal circulation by domestic supply chain adaption in China. Moreover, the increasing research and development activities, along with internet penetration and modern technologies, are crucial drivers in pushing the growth of the route optimization market for the Chinese region.

The COVID-19 impact on the China route optimization market was threatening because of the halt of logistics operations due to the strict lockdown and restrictions all over the country. Due to the declining supplies, the manufacturing facilities were shut down during the worldwide pandemic, The logistic operators and e-commerce sellers were not able to deliver the products. As per the International Finance Corporation (IFC), and World Bank Group, and major Chinese ports witnessed the backlogging of cargo during the pandemic. According to the IFC, the long-haul trucking segment, which transports 80% of Chinese goods, saw a 15% drop between January 24 and February 26, 2020, compared to 2019. . Additionally, travel restrictions led to a shortage of drivers in the logistics chain, which affected the route optimization market negatively in China.

Large e-commerce presence, distribution network optimization, and increasing research and development

According to the October 2021 article by the East Asia Forum, the Chinese e-commerce market multiplied by 34 times in the decade to 2020, as compared to the world’s ninefold growth. Additionally, the article mentioned that e-commerce sales in China were USD 2.3 trillion in 2020, making up over half of the total USD 4.3 trillion in global sales. The large e-commerce market in China is anticipated to boost the growth of the route optimization market owing to the large volumes of orders transacted daily. The same-day delivery preference inclination of consumers will further lead to e-commerce sellers and operators choosing the best possible route in terms of time and costs by leveraging route optimization software for expected deliveries. Additionally, as per the January 2022 news release by the National Development and Reform Commission (NDRC) of the People’s Republic of China on the NDRC website, China plans on developing its modern distribution system to become more efficient by 2025, as unveiled in the 5-year plan period (2021-2025). The modern distribution project has 2035 as its completion year. NDRC will also collaborate with the government to develop strategic pivot cities and backbone corridors for China's modern distribution network. The government-backed distribution optimization is projected to drive the market for route optimization since the expansion of the logistics network will lead to an increased demand for route optimization by several sellers and logistics operators. Additionally, as per the December 2021 China Power release, China’s research and development expenditure increased 42-fold between 1991 and 2020. Also, the same article stated that China, in 2020, spent more on R&D than Japan, South Korea, Germany, France, and the UK combined. Also, as a part of the Dual Circulation Strategy (DCS) by the Chinese government, the government intends to attract more foreign capital and FDI to scale  up innovation in areas like artificial intelligence, blockchain, robotics, and other domains where China has been lagging. Also, strategic partnerships and innovations by tech players and logistic companies are anticipated to push forward the growth of the route optimization market. For instance, Unilever and JD Logistics, in 2020, collaborated by signing a memorandum of understanding (MoU) for the exploration of smart and sustainable solutions in the supply chain. The combined growth of the e-commerce space, logistic optimization, and technological advancements, along with companies’ innovations, partnerships, and expansions, are projected to drive the market for route optimization in China during the forecast period.

Increased reliance on foreign countries

The route optimization market in China is projected to see robust growth owing to its large e-commerce presence, distribution network optimization, and technological research and development. However, the increased reliance of China on foreign countries for some crucial goods and commodities is anticipated to slow the growth of the route optimization market in China. For instance, as per the December 2021 release by China Power, China is heavily reliant on foreign countries like the US, Taiwan, Germany, South Korea, Japan, and the Netherlands for high-technology products like semiconductor chips and integrated circuits. The increased vulnerability of China for technological goods, which are highly used in making the infrastructure of route optimization systems, is anticipated to lower the market growth of the route optimization market during the forecast period, in case of any trade dispute. Moreover, with the ongoing tensions with the US, China is prone to a semiconductor deficit, resulting from projected trade tensions, thereby resulting in a decline in software development for route optimization, thereby restraining the market growth during the forecast period in China.

Segmentation

• By Product
  • Software
  • Services
• By Application
  • Food Delivery
  • Ride-Hailing Services
  • E-commerce
  • Others