ZTO to Form Joint Venture with Turkish Airlines, PAL Air

Chinese courier ZTO Express will form a logistics joint venture with Turkish Airlines and Hong Kong’s PAl Air to expand its global delivery network, the company said in a statement Monday.

The new venture will be based in Hong Kong with businesses including door-to-door logistics services, warehouse operations, order and supply chain management, according to the agreement signed by the parties in Istanbul.

Lai Haisong, chairman of ZTO, said the parties will integrate strengths and resources in global delivery, warehouse, cargo freight and aviation routes to explore business opportunities in emerging sectors.

Ilker Ayci, chairman of Turkish Airlines, said he expects the joint venture to become a “game changer” for the global express transport business and one of the world’s largest business services providers.

“In five years’ time (the joint venture) will generate over $2 billion of revenue,” Ayci said. “The growth is expected to continue gradually parallel to the e-commerce demand.”

According to PAL Air Vice Chairman Vivian Lau, revenue from the global courier industry is expected to reach $340 billion in 2020, boosted by the expanding e-commerce sector.

NYSE-listed ZTO is one of China’s largest delivery companies and has been rapidly expanding its global network in recent years. It currently operates offshore package transfer centers in the U.S., Japan, South Korea, Germany and other countries.

Last month, the company completed a $1.38 billion fundraising from investors led by Chinese e-commerce giant Alibaba Group Holding Ltd. and its logistics arm Cainiao Smart Logistics Network Ltd. The consortium holds 10% of ZTO after the investment.

Turkish Airlines operates flights to 300 destinations in 121 countries. The airline’s new facilities in the Istanbul New Airport, set to start operation in October, will add 4 million tons of cargo processing capacity. Hong Kong-based PAL Air operates parcel delivery services in several Asian countries.

Contact reporter Han Wei (weiha@caixin.com)