SHANGHAI -- With half of the world's parcels now being delivered in China, thanks to the explosive growth of e-commerce in the country, domestic and foreign logistics providers alike are bolstering capital investment and striking new partnerships in hopes of taking a bigger slice of the pie.

According to China's State Post Bureau, 40 billion parcels were delivered in the country in 2017 -- up 28% from the year before. The figure has increased 33 times just in the last decade, thanks to the rise of e-commerce titans like Alibaba Group Holding and JD.com.

"I shop online at least 20 times a month," said one restaurant worker in Shanghai. The 26-year-old relies on the internet for most of her shopping, from clothes and cosmetics to even groceries. She checks her smartphone frequently to see where her packages are.

The couriers often miss the designated delivery window or leave packages unattended outside her front door, but she does not seem to mind. "I get the items in one to three days, so it's convenient," she said.

The State Post Bureau expects parcel delivery to increase another 20% this year to 49 billion. To deal with surging demand, SF Holding, China's largest delivery company, had expanded its fleet of cargo planes from 11 in 2013 to 40 by the end of 2017. It is planning a further increase to 55 over the next three years.

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In China, many leading logistics providers outsource their deliveries to smaller contractors or even individual couriers. But SF Holding has bolstered the quality of its services by handling the entire delivery process in-house. Its sales jumped 23% on the year in the first nine months of 2017 to 49.8 billion yuan ($7.86 billion), and net profit by 11% to 3.6 billion yuan.

Online retailers are also making inroads in the logistics sector, which they consider crucial to their own success. Alibaba said in September that it would invest 100 billion yuan in logistics research over five years. Subsidiary Cainiao Smart Logistics Network will team up with SF Holdings and other logistics providers to create more efficient warehouses and a delivery network in rural areas, with the eventual goal of guaranteeing delivery anywhere in China within 24 hours and overseas within three days.

But the logistics sector faces narrowing margins. Due to growing competition, e-retailers have been offering perks like free shipping for purchases of a certain value. This in turn has squeezed shipping prices from 30 yuan a package in 2006 to just 13 yuan in 2016.

Meanwhile, labor costs are on the rise. The shortage of workers, most of whom are migrants from rural areas, also led to widespread delays and lost packages at the beginning of 2017.

JD.com is both building an in-house delivery system and developing power-saving technologies, like automated warehouses and self-driving trucks. It opened a fully automated distribution facility in Zhejiang Province at the end of 2017. It has also begun delivering packages to rural villages using drones.

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"Given the surge in labor costs, there will come a time when delivery technology will be the determining factor of how competitive an online retailer is," a JD.com official said.

The growth of China's middle class and a boom in international travel are also fueling a rise in online purchases from overseas. Deliveries from outside mainland China, including from Hong Kong and Taiwan, jumped 34% to well over 800 million parcels last year, data from the State Post Bureau shows.

U.S. delivery company FedEx recently opened a 130,000-sq.-meter logistics center outside Shanghai with an automated sorting system capable of processing 36,000 items per hour. Karen Reddington, president of the Asia-Pacific division of FedEx Express, expects Chinese demand to grow further, citing e-commerce and the Belt and Road Initiative.

Businesses are teaming up to handle the expected increase in workload. JD.com is partnering with Japanese courier Yamato Holdings to get products from Japanese and other retailers into Chinese consumers' hands faster. SF Holding established a joint venture with American peer UPS last year.

Under an agreement with Alibaba, Nippon Express transports goods and handles customs clearance for exporters shipping to China. The Japanese company is also launching a joint project with a Chinese university to use new technology to improve efficiency in warehouse operations. "We're focused on technological innovation in China," a Nippon Express executive said.