UPS, SF Holding announce joint delivery service

SF Express' branch in Shenyang, Northeast China's Liaoning province is seen in this Nov 11, 2016 file photo. [Photo/Xinhua]

Logistics giants UPS and SF Holding on Friday announced a joint venture to provide international delivery service from China to the US and eventually include other destinations.

SF Holding, the parent company of SF Express, is China's largestdelivery service; UPS is the world's largest express delivery company. The joint venture will combine SF's extensive Chinese network with UPS' global network across 220 countries and territories.

The joint venture is an opportunity to penetrate the small- and medium-sized businesses in China, saidAlan Gershenhorn, chief commercial officer at UPS. "[We'll be] providing much deeper opportunities for those Chinese businesses," he said.

Gershenhorn said that SF Holding was a natural partner because of the company's comprehensive coverage of China and market dominance. "This is one of those one-plus-one-equals-10 type of opportunities," he said, combining SF Express' coverage across China and UPS' delivery network.

China is expected to be the largest express delivery market in the world by 2020, with revenue predicted at more than $100 billion.

"China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage," said Alan Wong, SF's group vice-president, in a statement.

"Coupled with a rapidly growing and internet-savvy consumer base, it's imperative that SF and UPS collaborate to revolutionize the logistics sector,'' he said. ``Together, we aim to bring greater competitive advantages to our customers in China, to succeed globally."

UPS has been operating out of China since 1988, but US courier services like UPS and FedEx have had limited market share in China where local players dominate.

"This is just another step on the journey here" in China,Gershenhorn said.

UPS said it moves about 19 million packages a day. It does not break out sales figures or activity in China, but the company reported in its first-quarter earnings that average daily export volumes in the Asia-Pacific region were up by more than 10 percent.

International revenue increased 4.9 percent year-on-year to $3.1 billion.

Shenzhen-based SF Express reported profit of $609 million last year, with annual growth rate three times that of 2015. It delivered more than 31 billion packages in 2016.

It went public on the Shenzhen Stock Exchange in March, bringing its founder Wang Wei's net worth to $27.6 billion and making him the third-richest man in China behind Dalian Wanda Group's Wang Jianlin and Alibaba's Jack Ma.

The Chinese e-commerce boomfrom the last decade led by Alibaba has made SF Holding one of the most valuable tech stocks in Shenzhen, with the company's market cap at $29 billion.

The company has about 117,000 employees, 80,000 of whom are couriers. It was the first courier service in China to have its own fleet of aircraft, and announced in February that it will build its own airport in Ezhou by 2020.