SF Airlines operates five 767Fs, and more are on the way. Will the Malaysia-China cross-border e-commerce initiatives create enough demand for air cargo for SF to launch scheduled freighter service to Malaysia’s Kuala Lumpur International Airport?

Earlier this week, SF Express announced it had joined the “Malaysia-China cross-border e-commerce sharing platform” as an official partner. After similar bi-lateral initiatives were criticized for favoring Chinese exports to Malaysia, the new sharing platform appears to be the first that aims to help Malaysian SMEs boost exports to China.

While increased trade flows between the two countries can be expected, opinions vary regarding the resulting impact on airfreight volumes. Since cross-border e-commerce is often touted as the vanguard to air freight demand growth, Malaysia is a market to watch as such programs boost trade of this type.

But what exactly is a cross-border e-commerce sharing platform? It starts with the recognition that foreign SMEs encounter difficulties when trying to sell goods to the Chinese market through online channels. Common pain points include customs clearance, taxation, and language barriers to name a few. The Malaysia-China “sharing platform” links together regional e-commerce players to enable local merchants to sell globally.

Apart from SF Express, the group’s official partners include the Industrial and Commercial Bank of China (ICBC), which hosts its own e-commerce portal, as well as Malaysian e-tailer Home Deal, and the eBusiness Association of Malaysia. In practice, this means that a Chinese e-tailer can serve as a proxy for goods listed on a Malaysian e-tailer’s website, or vice-versa, preventing SMEs from having to figure out how to navigate foreign e-commerce platforms. SF Express in turn, takes care of the cross-border logistics.

“E-commerce merchants in Malaysia can start an online business on Home Deal, a local e-commerce platform, and then select premium products to sell in China via ICBC’s e-commerce platform. SF Global Express (M) Sdn Bhd is the designated logistics partner of the Malaysia-China Cross Border E-Commerce Sharing Platform, providing integrated logistics solutions to merchants on the platform,” SF Express explained in a release.

We note, however, that SF Express’ airline affiliate, SF Airlines, does not currently operate any freighter flights between China and Kuala Lumpur. Wuhan-based Uni-top Airlines, does, however, operate scheduled freighter flights between SF’s main hub in Shenzhen, and Kuala Lumpur, and likely cooperates with SF to some extent. Looking ahead, Cargo Facts would not be surprised if SF Airlines begins calling at KUL in the near future.

As previously mentioned, the sharing platform is not the first major China-Malaysia cross-border e-commerce initiative. In March 2017, Malaysia launched the “Digital Free Trade Zone” (DFTZ) led by the Malaysian Government, and Alibaba founder, Jack Ma. The DFTZ, which includes both physical and virtual zones, envisions Malaysia becoming a regional hub for cross-border e-commerce fulfillment.

Once again, the future impact on air cargo volumes is hard to quantify. David Su, Chairman of YTO Cargo Airlines, an Alibaba-affiliate, is one who believes that Malaysia could become a major gateway for regional air cargo flows. Su recently told Cargo Facts, “Cross-border e-commerce will be the key driving power of air cargo in China, both domestic and international. In the future, you will be able to buy anything from anywhere and pay via Alipay. This is why Malaysia is making the right choice. Maybe Kuala Lumpur will be the e-commerce center of SE Asia, and then the financial center because money flows through. They will certainly become the transportation center because that’s where carriers will fly.”

Sighting an SF Airlines freighter is becoming an increasingly common event at airports throughout China. But just how soon might one land at KUL?

Those interested in hearing more on cross-border e-commerce in Asia are invited to join us in Shanghai next week for Cargo Facts Asia, to be held 23-25 April at the Mandarin Oriental Pudong. YTO’s David Su will speak on a roundtable panel discussion dedicated to express networks in Asia. Separately, representatives from JD Logistics and Alibaba’s Lazada affiliate will present their views on cross-border e-commerce. For more information, or to register, visit www.cargofactsasia.com