How can online freight platforms strike a balance between risk management and revenue expansion?

Release date:

2021-11-12

Author:

Jinhua Logistics

Within the industry, companies loudly tout how they operate in compliance across various channels; however, a closer look at the guidelines for online freight platforms reveals that such claims of compliance are invariably framed from the company’s own perspective.

Meanwhile, a significant number of companies and so‑called “experts” mistakenly believe that the core business of online freight platforms lies in issuing and selling invoices, rather than in strengthening transportation management capabilities through the integration of actual transport operations and the enhancement of their management systems—thus turning what should be a platform’s competitive edge into a mere afterthought. This situation is both amusing and disheartening. As the operating environment undergoes profound structural shifts, advantages that once fueled growth may gradually morph into burdens that are hard to shed.

Online freight platforms serve as the linchpin of digital transformation in road transportation, with full‑scale, end‑to‑end connectivity and real-time feedback forming its foundation. Once all data is seamlessly integrated, the platform amasses substantial data assets, enabling it to address many longstanding challenges that were previously insurmountable in the industry—spurring new business opportunities and driving revenue growth. However, as the adage goes: “All the gifts fate bestows come with a price already marked in the shadows.” While online freight platforms swiftly aggregate resources from across the ecosystem, providing an excellent framework for digital transformation, operational risk management—beyond technical safeguards—remains a critical area that must be carefully addressed.

Potential Risk-Control Issues in the Operation of Online Freight Platforms

1. Transportation Contract

Since online freight platforms effectively assume the dual roles of carrier and shipper, these dual identities manifest different legal statuses within distinct legal relationships. To safeguard the legitimate rights and interests of all parties involved in transportation and to clarify their respective responsibilities, the importance of contracts is self‑evident.

In practice, the actual carriers are typically individual drivers or independent operators affiliated with logistics companies. Due to longstanding industry norms, there is often little willingness on both sides to formally execute freight‑transportation agreements. As a result, online freight‑platform operators may enter into waybill contracts on behalf of the actual carriers—or even fail to conclude any transport contract at all. When transport disputes arise, this ambiguity in liability leaves the rights and interests of all parties without legal protection.

Measures: The reasons why platform enterprises do not enter into contracts with actual carriers, aside from longstanding adverse practices, also include the inconvenience of contract drafting and management. In fact, at present, An electronic contract is a form of contract formation recognized by law. An electronic contract that incorporates reliable electronic signatures, third-party timestamping services, and anti-tampering technologies carries the same legal force as a paper-based contract. The Civil Code explicitly sets out the rules governing the time and place of conclusion of electronic contracts, thereby establishing their legal status at the level of fundamental law. Therefore, we recommend that platform enterprises adopt digital technologies such as electronic contracts and electronic waybills to enhance their contract management capabilities and mitigate contractual compliance risks.

2. Tax Compliance

At this stage, according to the guidelines for online freight platforms, some enterprises treat invoicing and tax‑related compliance as strategic growth drivers rather than prioritizing cost reduction and efficiency gains. Consequently, practices such as fraudulent order‑boosting and invoice‑issuing—where platforms engage in illegal activities like cross‑platform consignment or fictitious transactions—are frequently observed. Issues such as the buying and selling of invoices, false input‑tax deductions, abnormal transport‑route patterns, and irregular fund‑flow activity are also widespread. As a result, many companies struggle to achieve full compliance when it comes to VAT input‑tax credits, fuel‑tax invoices, transportation invoices, and toll‑fee receipts.

In accordance with relevant national regulations, the issuance of false invoices shall be subject to confiscation of illegal gains by the tax authorities: for falsely issued amounts under RMB 10,000, a fine of up to RMB 50,000 shall be imposed; for falsely issued amounts exceeding RMB 10,000, a fine of more than RMB 50,000 but not exceeding RMB 500,000 shall be imposed.

Where the conduct constitutes a crime, criminal liability shall be pursued in accordance with the law. Moreover, the platform itself faces compliance risks, and its partner enterprises may also be held liable, potentially exposing them to legal risks such as tax evasion, the issuance of false special value-added tax invoices, or the use of such invoices to fraudulently obtain export tax rebates or offset taxes.

Measures: Network freight platform enterprises should still… Shift the focus of development toward strengthening the platform’s R&D capabilities, enhancing its information‑based management capacity, and reducing operating costs. Foster a sound development mindset and bolster taxpayers’ awareness of tax compliance; do not treat invoicing or resolving tax‑related issues as the primary drivers of business growth.

3. Funding Risk

In the process of collecting payment on behalf of shippers and settling funds, online freight platforms often, after completing a transaction, remit the freight charges offline in a lump sum to an intermediary, who then forwards the payment to the actual carrier. This practice prevents the integration of the five flows—information, commerce, logistics, finance, and documentation—and also creates significant risks of invoice fraud.

Furthermore, when shippers submit bank statements for freight charges, most online freight platforms issue a consolidated bank statement showing an aggregate amount without detailed breakdowns that can be independently verified. Given that such aggregate settlement documents fail to accurately reflect the true nature of the underlying transactions, this increases the likelihood of scrutiny from tax and transportation authorities, thereby exposing platform operators to more rigorous regulatory oversight.

According to the Guidelines for Online Freight Platforms, most such platforms have not yet implemented genuine bank escrow. Instead, freight charges remain on the platform, forming a funds pool, which gives rise to challenges in fund management and risk control. In practice, shippers are predominantly small and medium-sized enterprises; if the platform lacks robust financial management and risk‑control capabilities—or worse, misappropriates these funds—shippers are highly vulnerable, potentially triggering systemic risks to their cash flow.

Measures: Given that shippers are increasingly aware that, When selecting a freight‑transport platform, prioritize those that integrate directly with banking systems, ensuring that funds circulate within the bank‑account framework and thereby enhancing fund security. It is recommended that platform enterprises raise their awareness, refrain from pursuing short-term gains, and, from a strategic perspective, promptly implement bank custody for user accounts.

4. Waybill Compliance

Network freight operators shall, in accordance with the requirements of the E-Commerce Law of the People’s Republic of China, the Tax Collection and Administration Law of the People’s Republic of China, and their implementing rules and other relevant laws, regulations, and rules, maintain records of actual carriers’ and shippers’ user registration information, identity verification data, service details, and transaction information, and retain all tax‑related documentation, thereby ensuring the authenticity, completeness, and availability of such information. According to the Guidelines for Online Freight Platforms, online freight platform enterprises are required to ensure that the driving route, unloading locations, and operating times associated with each waybill are fully traceable. Furthermore, the invoice issued for each transaction must accurately reflect the real‑time order details, enabling shippers to access order information at any time through the invoice.

In practice, some online freight‑transport platforms complete waybills offline and then import the data into their systems afterward; others alter, fabricate, or retroactively enter information such as weighbridge records, using falsified data to masquerade as legitimate waybill details in order to issue multiple invoices; and still others engage in fraudulent trajectory‑matching by fabricating routes or substituting them with alternative tracks, resulting in a mismatch between the actual cargo‑carrying route, timing, documentation, and recorded trajectory.

Measures: Adhere to the “five‑in‑one” principle in freight operations, ensuring the authenticity and compliance of business processes and online transactions; maintain data integrity, with verifiable vehicle‑tracking records and transparent, reliable financial‑flow documentation; and, throughout operations, rigorously cross‑check multiple data sources to prevent the practice of back‑filling orders. In particular, no modifications should be made to platform data; it is best to leverage a blockchain platform to ensure data integrity.

5. Data Security

Compared with traditional logistics enterprises, online freight platforms have a distinct advantage: data integration and accumulation.

From contract signing to freight payment, all aspects of the online freight business are conducted online, thereby achieving the integration of five flows: information flow, commercial flow, logistics flow, capital flow, and document flow.

This advantage can facilitate the transformation of business data into digital assets, laying the groundwork for future supply-chain finance and aftermarket services. At this stage, as both the government and the general public become increasingly aware of data protection, the utilization of data assets will become ever more systematic. The Guidelines for Online Freight Platforms recommend exploring the application of data assets in compliance with relevant regulations, which will shape the industry’s development trajectory in the period ahead.

Globally, the European Union has already enacted stringent data protection regulations, and the United States has established case law on data breaches. Although China currently lacks clear statutory provisions in this area, online freight‑platform operators should nonetheless begin planning and proactively consider: among the data currently held by the platform, which items are tradable, and which constitute customer privacy? Furthermore, once processed, to whom should the property rights in such data be attributed—its producers or the original data owners?

Measures: Platform enterprises must collect data in a lawful and compliant manner, ensure proper authorization by data subjects, and also pay close attention to data anonymization.

The Value Reversion of Online Freight Platforms

1. Transportation is paramount; cargo control is king.

Faced with mounting pressure from rising logistics costs, shippers are left with little choice but to impose rigid cost‑cutting demands on carriers, while carriers seek to preserve a reasonable profit margin. In the absence of effective decision‑support tools, shippers have very limited room to further squeeze carrier prices, and expanding their network of carriers entails significant switching risks.

For online freight, transportation is the foundation, but cargo control is where the real value lies. Logistics is a service‑intensive B2B business environment. Beyond aggregating high‑quality transport capacity through its platform, online freight platforms must, even more importantly, We have established a lean‑operating system, offering shippers professional, end‑to‑end solution design, precise pricing, on‑site services, and robust risk management. By leveraging both technological innovation and systematic optimization, we enhance efficiency, reduce costs, mitigate risks, and refine operational governance, fostering long‑term partnerships with our clients and gaining proactive control over cargo management.

Under the current market conditions, transport capacity has already exceeded societal demand. The imbalance between cargo supply and transport capacity is likely to persist in the long term. However, in practice, effective capacity‑management solutions remain scarce. From shippers to drivers, contracts often pass through several layers of subcontracting, and whether a platform can secure the primary contract hinges largely on its ability to deliver coordinated efficiency, optimize capital deployment, and maintain control over the entire transportation chain.

Online freight platforms enable the capture of end-to-end operational data, particularly through deep integration with shippers’ systems, efficiently collecting high-quality operational insights. This enhances the accuracy and execution efficiency of intelligent forecasting, smart quoting, optimized route planning, dynamic dispatching, customer service, risk management, and autonomous driving, propelling the logistics industry into a more user‑centric “hyper‑intelligent era.” Moreover, this capability itself represents a significant driver of revenue maximization.

02. Industrial Integration and Scale Expansion

In the logistics industry, cost-cutting typically comes at the expense of competitive pricing, which in turn makes digitalization, transparency, and intelligent automation difficult to achieve.

In recent years, online freight platforms have benefited from favorable policy support. Seizing these opportunities, many companies have leveraged big data and advanced technologies to deepen their presence in this sector. A growing number of firms are investing in cutting-edge smart hardware and standardizing their service processes, thereby achieving digitalization and online transformation across the entire value chain—from individual business operations to broader industry integration. As a result, networked freight platforms with multi‑party resources are poised to drive more dynamic cross‑industry convergence, potentially extending into finance, the automotive aftermarket, insurance, SaaS services, vehicle‑connected ecosystems, and multimodal transportation.

The core competencies that online freight platforms need to gradually build are: Horizontal diversification, upgrading to a comprehensive logistics solutions provider, and deepening vertical integration within the supply chain are the three strategic transformation options for logistics enterprises.

In the logistics express‑line market, where non‑standardized attributes are pronounced and the industry remains fragmented, emerging integrated platforms are rapidly gaining traction and attracting intense attention from capital markets. Compared with mature markets such as those in the U.S. and Japan, China’s logistics sector still offers substantial room for ongoing consolidation. Against a backdrop of rising customer expectations and mounting competitive pressures, companies should thoughtfully focus on continuously strengthening their core competencies to further capture market share and maintain their leading position.

3. Leverage capital to accelerate strategic deployment.

From the perspective of capital investors, is logistics truly a new growth driver, or an aging industry on the brink of decline? As digitalization and node‑level upgrades reshape the landscape, how should we assess investment opportunities in the logistics sector amid evolving business‑model combinations? Under the pressure of the internet‑driven disruption, traditional logistics firms are scrambling to adapt. In mature markets, only two to three large players typically survive, suggesting that the future of the logistics and express‑delivery industries will inevitably be marked by a major reshuffling. Local logistics companies must strengthen their capabilities, accelerate their strategic deployments, and plan ahead—yet all of this requires substantial capital.

However, logistics companies like SF Express adopt a selective approach to financing, refraining from pursuing capital for its own sake. Regardless of the type of investor, the ultimate focus remains on value‑based investing. As the “Made in China 2025” strategy continues to advance, China’s electronics and telecommunications sectors are shifting toward nationwide, high‑end manufacturing. For logistics firms, it is especially critical to keep pace with the evolving needs of their core customers and successfully transform into fast‑delivery service providers that offer end‑to‑end, high‑quality solutions. Accordingly, logistics companies that secure investment should prioritize internal growth and fully unlock their potential.

The enhancement of technological capabilities typically requires substantial upfront capital investment and rarely yields tangible returns in the short term. Moreover, Investment in smart equipment has been robust in the past, and going forward, technology‑driven software is set to become another major investment hotspot. Meanwhile, midstream system integrators will collaborate with ecosystem players through strategic investments to build integrated solution capabilities.

4. Data Assetization

When you connect and analyze logistics data from a broader, upstream‑downstream perspective, you’ll be pleasantly surprised to find that the correlations embedded in the data can yield insights far more meaningful than the logistics data itself. For example, upstream manufacturing factors such as shipping lead times, procurement cycles, production frequency, production efficiency, payment terms, flow directions, and distribution channels—all of these are implicit byproducts of logistics data.

But if we look at the data in isolation, it’s essentially just waybill information—nothing more than a set of in-memory records. Only when data scalability is achieved does the 2B‑level data empowerment truly come to fruition. Unfortunately, those of us in the logistics industry who generate this data are gradually being swallowed up by the very sector we help sustain, because we fail to become its beneficiaries and instead end up as its exploited laborers.

The logistics industry is booming, and information technology and big data have begun to gradually become the norm. The immediate task is to bridge the gap between data producers and data beneficiaries, as well as to transition from data collectors to data transformers, transform streaming data into closed-loop data, and convert single-board data into temperature‑related data.

Data that can directly generate value—its monetization is essentially a data‑trading process. The costs involved are primarily those of data collection, processing, and storage, making this type of monetization relatively straightforward. By contrast, leveraging data to empower business operations entails a more complex, specialized asset‑creation process.

As data resources become increasingly abundant, turning data into an asset will enable enterprises to enhance their core competitiveness. How can we deepen the integration of big data into logistics operations, develop more high‑value‑added ancillary services, and establish a more robust monetization model?