Date
24 August 2017

SF Express on road to air courier domination

When founder Wang Wei {王衛} sold a quarter of his SF Express firm to a consortium last year for around 8 billion yuan (US$1.32 billion), many were left scratching their head — Wang had not long said that fresh capital is the last thing he needs.

Tech industry blog Huxiu.com seems to have found an answer. Citing an SF Express source, it suggested that the leading courier firm will use the funds raised from CITIC Capital, Suzhou-based Oriza Holdings and China Merchants Group, to give wings to its air courier business.

The group plans to double its aircraft fleet to 69 by 2015, and expand it to 169 by 2021. SF Express set up its own cargo airline in 2009 and as of November operated and owned 13 planes and leased another 19.

There is plenty of room for growth in China’s air courier business. The air freight volume in China could reach 9 million metric tons in 2015, according to the Civil Aviation Administration’s 12th five-year plan. SF Express shifted 445,000 metric tons of air freight in 2011 and 600,000 metric tons in 2012.

The company expects the industry to have a combined fleet of 300 aircraft on the mainland seven years from now and SF’s goal is to have two-thirds of that market.

Rival state-owned EMS trails well behind. EMS plans to have just 46 cargo planes by 2015 and most of those will be leased, making it less nimble.

EMS last month withdrew its application to go public, fueling speculation that its financials have worsened amid escalating competition.

EMS is also bugged by a reputation for subpar service. It’s regularly described by customers as expensive, slow and having a nasty attitude.

With all those factors in play, the gap in market share between SF Express and EMS looks set to widen further.

– Contact the writer at [email protected]

SK

 

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