UPS and China-based SF Holding to launch joint venture

Earlier today, UPS and SF Holding, the parent company of leading integrated express logistics service provider in China, SF Express, said they plan to launch a joint venture, focusing on developing and providing international delivery services.

The joint venture will initially focus on deliveries from China to the United States, with plans to expand to other locales. The companies said that they will leverage their complimentary networks, service portfolios, technologies, and logistics expertise, adding that the joint venture is subject to regulatory approval.

As a market leader in China with countrywide network coverage, UPS said that SF brings comprehensive service capabilities, as well as the highest brand recognition in the Chinese small package market. And the joint venture meshes SF’s Chinese network, with more than 13,000 service points, and UPS’s globally integrated network coverage among more than 220 countries.

In terms of what this joint venture offers up for customers, UPS cited: greater coverage, additional routing options, increased capacity, and more options for transit times and services.

UPS Vice President of Public Relations Steve Gaut told LM that there were multiple drivers for this endeavor.

“The partners believe there is a market opportunity to be seized by connecting the more than 13,000 SF service locations in China and the extensive SF customer base with the global reach of the UPS network,” he said. SF is the express shipping leader in mainland China and they have an extensive China vehicle and employee network.  UPS has arguably the largest global network and extensive coverage of the U.S. market.  Our objective is to create a venture that will initially provide Chinese customers with better shipping solutions for the U.S. market.  With the exponential growth in cross-border ecommerce in the future, we expect more demand from U.S. customers who want to buy from small and middle market Chinese companies.”

Gaut also noted that UPS expects to offer international shipping alternatives to Chinese customers that will allow them to have greater access to the US market, initially and more international markets as the business expands.

From a competitive perspective, Gaut said that in addition to its existing international B2B export business in China, this joint venture will help UPS connect with many new small and mid-size customers that today are not using UPS to ship directly to consumers in the U.S.

When asked what other markets will this joint venture expand into after China, he said it was submitted for regulatory approval in China and is awaiting competition authority clearance, noting that until this is complete, UPS is not providing additional information on markets or other product plans.

SF Group Vice President Alan Wong said in a statement he is bullish about the joint venture’s prospects.

“China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage,” he noted. “Coupled with a rapidly growing and internet-savvy consumer base, it’s imperative that SF and UPS collaborate to revolutionize the logistics sector.  Together, we aim to bring greater competitive advantages to our customers in China, to succeed globally.”