Caixin
May 31, 2017 05:34 AM
BUSINESS & TECH

YTO Express Delivers Global Alliance, 5 Billion Yuan Logistics Hub

YTO Express Group Co. Ltd. plans to buy a majority of Hong Kong's On Time Logistics for HK1.04 billion ($134 million). Above, a YTO Express vehicle drives through Yichang, Hubei province, on Nov. 1. Photo: IC
YTO Express Group Co. Ltd. plans to buy a majority of Hong Kong's On Time Logistics for HK1.04 billion ($134 million). Above, a YTO Express vehicle drives through Yichang, Hubei province, on Nov. 1. Photo: IC

(Beijing) – YTO Express, one of China’s top parcel delivery companies, said it will set up a 5 billion yuan ($735 million) logistics hub in coastal Zhejiang province and form an alliance with global peers, as part of a push to expand beyond its home market.

The latest moves would come as YTO Express Group Co. Ltd. and about a half dozen other recently minted Chinese parcel delivery giants look for their next stage of growth, following a rapid rise fueled by China’s booming e-commerce sector. YTO has been one of the most outward-looking companies in the sector, announcing its purchase of a Hong Kong-based regional logistics services provider earlier this month for HK$1.04 billion ($134 million).

The company’s latest global push will be anchored by a new alliance, the Global Parcel Alliance, which will include members from Turkey, the United Arab Emirates, South Korea and Japan, among others, YTO said at an event to announce the new initiatives on Sunday.

The company also announced its plans to set up the logistics center in Yiwu, a city in coastal Zhejiang province known for its long history as a commodities trading center. Yiwu itself is just 100 km south of provincial capital Hangzhou, home to e-commerce juggernaut Alibaba Group Holding Ltd., which is also a YTO investor.

The new center will include a range of facilities, including an e-commerce industrial zone, an air logistics hub and wide range of distribution facilities.

“We can’t meet our needs simply through ordinary acquisitions, so we’re promoting a YTO-style alliance,” said vice president Hao Wenning. “It will become a common service provider for Chinese groups inside and outside China.”

The Global Parcel Alliance is one of the world’s first among private delivery firms, providing an alternative to the older, more traditional network between the world’s major government-backed postal services. Accordingly, one of the new alliance’s major goals will be standardizing procedures for a growing volume of cross-border delivery services, said YTO Chairman Yu Weijiao.

“If we can’t achieve this level of standardization, then it’s really not an alliance, and it’s just a short-term thing,” he said.

Parcel delivery services have exploded in China over the last five years, fueled by a parallel explosion in e-commerce from companies like Alibaba and JD.com Inc. YTO and rivals like SF Express and ZTO Express delivered more than 30 billion parcels last year, representing 23 packages for each of China’s 1.3 billion people, according to the State Post Bureau. With the competition fierce at home, many of the biggest Chinese names are now looking to expand abroad.

At the same time, e-commerce companies are aggressively promoting cross-border services to feed on growing appetite for imported goods from Chinese consumers, and Chinese companies that want to export their wares overseas.

YTO’s latest move comes less than a week after SF Holding Co. Ltd., parent of the nation’s biggest parcel delivery company SF Express, announced its own formation of a global parcel delivery joint venture with global giant UPS. The pair said that tie-up would initially focus on deliveries between the U.S. and China, with an eventual aim to expand into other global markets.

Contact reporter Yang Ge (geyang@caixin.com)


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