Dec 24, 2014

Shentong Express opens Japanese office

From left: Jun Komine, president of Okinawa Products Associated Co., Xue Ligong, president of Shentong Express Japan, Masatoshi Asato, president of Okinawa Keieisha Kyokai and chairman of the Bank of Okinawa, Chen Dejun, chairman of Shentong Express, and Tsunemi Tamaki, director of the Industry Promotion under Okinawa's Department of Commerce, Industry and Labor

The businesses of major express transport providers in China have been expanding against the backdrop of the country's growing e-commerce market. The Shanghai-based Shentong Express (STO) held a ceremony at The Naha Terrace "Adan" in Naha City on Dec. 17 to commemorate the establishment of its Japanese subsidiary Shentong Express Japan (led by its president, Xue Ligong). On the other hand, China's largest express company SF Express (headquartered in Shenzhen) has received its 16th company-owned cargo airplane and is slated to take in the turnover of its first medium-size cargo plane B767-300 in the second quarter of next year. Meanwhile, YTO Express has obtained the necessary approvals for the establishment of a cargo airline in Hangzhou. Amid the growing market, how Japanese-affiliated logistics providers will collaborate with major Japanese express companies will gain a lot of attention from the concerned sectors in the industry.

STO handles about 40% of the cargoes delivered in China by the Alibaba Group, the largest e-commerce company in the country. Its Japanese subsidiary was founded on Nov. 14 at the International Logistics Special Zone in Naha (formerly known as a free trade zone (FTZ)), choosing such location after assessing the various support systems and preferential measures offered by the prefecture, as well as the network of Naha airport. Majority of the Japan-bound cargoes it hauls are cargoes transported by air to Narita from Shanghai, but it seems that STO is also considering the use of the logistics functions of Okinawa in the future, targeting the development of the Southeast Asian market. For this year, the company handled a record-high 30.5 million items per day during China's "Singles Day" on November 11, the only time of year when Internet shopping sites sell their goods at greatly reduced prices. The above ceremony was attended by a large number of staffers from Shanghai who exerted a lot of effort to be there. It was held during the time of Okinawa's traditional dance Eisa.

The particulars of STO's Japanese subsidiary are as follows:
*Address: 2nd floor, Bldg. No. 2, International Logistics Zone, Sakihara-Chisaki, Kagamizu, Naha City, Okinawa Pref., Japan 901-0142
*Telephone No.: 098-996-1001
*Fax No.: 098-996-2288

Meanwhile, SF Express took in its 16th company-owned cargo airplane - a B737-300F. The company received four company-owned cargo planes last year, and two units in April (B737-300F) and September this year. Broken down, its fleet is currently made up of eight B757-200F aircrafts, five B737-300F units and three B737-400F planes. At present, the only lanes where it runs services outside of Mainland China are the Hong Hong-Taiwan and Hangzhou-Taiwan routes. With the expansion of e-commerce in China, the company has been reinforcing the capacity of its network of domestic services in the country. Meanwhile, it is slated to take delivery of a B767 -300F, which will be converted from being a passenger plane, in the second quarter of next year. There is still no plan at the moment if this company-owned cargo plane will be deployed to the Japan trade, but with the deployment of the B767-300F as its first medium-size aircraft, it seems that SF Express is also getting interested in the network strategy inside and outside China.

With regard to the major express transport providers in China, the necessary permits were released by the local authorities in July this year toward the establishment of the Hangzhou-based Hangzhou YTO Express Airlines that has YTO Express, a major provider of express delivery services and e-commerce, as its mother unit. The YTO Group began operating its own cargo airplanes in June 2012 and apparently intends to boost its fleet to 20 aircrafts within the next 10 years. It is scheduled to take delivery of its fourth company-owned cargo plane shortly.

Now this much expansion in e-commerce in China is also giving a major boost to the volume of small-lot cargoes transported between Japan and China. There are no detailed data on exports and imports, but the number of monthly transactions of the Express Mail Service (EMS) of Japan Post this year evolves at a 20-30% year-on-year growth rate. In the case of mail, even though they are strong in their ability to haul cargoes through a global mail network, private entities in Japan and China would still have their success hinge on the partners and subcontractors they choose. In the selection of suppliers/vendors in Japan where the delivery network is growing, commissioning a major courier company and Japan Post will make nationwide services possible, notwithstanding the differences in service level per company. But for Japanese-affiliated couriers that are expanding in China, any entity has yet to embark on strategic partnerships owing in part to their competitive relationship. It seems that the strategies between and among major express providers, couriers and mail companies will also be called into question.

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