Breaking news: UPS and SF Holdings to establish JV

On Friday morning (Beijing Standard Time), SF Holdings, the parent company of China-based SF Express and SF Airlines, and US-based express giant UPS announced plans to enter into a joint venture, in which the two companies will use their respective assets and expertise to “collaborate to develop and provide international delivery services.”

The venture (subject to regulatory approval) will initially focus on providing logistics services ex-China into the US, but will later expand to include other destinations.

SF is one of China’s two largest express companies, and its airline subsidiary currently operates the largest express freighter fleet in the country. While the jv will undoubtedly seek to leverage both company’s extensive assets and delivery networks – which, for SF, includes more than 13,000 service points, and thousands of delivery personnel and vehicles within in China – it remains to be seen just how the jv will deal with air freight.

Last year, UPS placed an order for fourteen 747-8Fs with Boeing, noting that the intention was to add capacity, rather than replace ageing aircraft. Unless SF Airlines acquires larger freighters, the jv will likely utilize UPS’ widebody freighters on transpacific routes. This means that UPS’ 747-8Fs, and other widebody aircraft, may become a regular sighting at SF’s future global air freight hub, now under development near Wuhan, in central China.

SF does not currently operate anything larger than a 767-300F, but, after recently going public, the company certainly posseses the means to finance the purchase of larger aircraft.

Clearly, a major focus of the jv will be cross-border e-commerce between China and the United States. “China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage. 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,” said Alan Wong, Group Vice President of SF.

Cargo Facts will continue to monitor the UPS/SF joint venture as more information becomes available.