UPS, SF Express joint venture to focus on Asia-to-U.S. parcel lanes

The proposed joint venture between U.S. transport and logistics giant UPS Inc. and the parent of the Chinese company SF Express will introduce the U.S. market to a large but mostly unknown package delivery player, courtesy of UPS' domestic network.

The proposed venture, announced Friday, would call for UPS to pick up parcels in China on behalf of SF Express and move them to the U.S. through the UPS network. Steve Gaut, a UPS spokesman, said today that although there are other expansion opportunities being discussed, nothing firm is planned at this time.

In the mid- to long term, however, UPS will leverage the partnership to expand its presence in China, especially among the country's small to mid-size businesses, Gaut said in a separate e-mail on Friday. SF Express, touted as China's leading express delivery provider in business-to-consumer and business-to-business segments, serves 13,000 points in China, with 15,000 trucks and 36 all-cargo aircraft. UPS, which began operations in China in 1988, operates in 330 cities with 872 package cars and tractor-trailers, and 200 weekly flights linking the two countries.

It does not operate its own aircraft within China, and will rely on the SF Express fleet to broaden its coverage of time-sensitive goods.

SF Express launched very limited U.S. service in 2012 focusing on freight forwarding. Its U.S. presence remains small, with other companies—including UPS—providing deliveries on SF Express' behalf. Its U.S. operations are based in San Francisco.

Prior to 1988, UPS served China entirely through an alliance with Sinotrans, then effectively China's national air and surface transport company. UPS phased out the relationship as the Chinese market began to gradually open and it could establish its own base of operations.

The Chinese competition authorities still must approve the proposed venture, Gaut said. UPS is confident that it will past muster, he added.