UPS-SF Holding joint venture is granted regulatory approval from China’s Ministry of Commerce

The planned joint venture (JV) between UPS and SF Holding, the parent company of leading integrated express logistics service provider in China, SF Express, which was initially announced in May, received approval from China’s Ministry of Commerce today.  

This JV will focus on developing and providing international delivery services from China to the United States at first and subsequently to other trade lanes, as well as enable UPS and SF to leverage their complimentary networks, service portfolios, technologies, and logistics expertise, the companies said.

Prior to May’s announcement regarding the initial plan to launch the JV, UPS’s Worldwide Express service was made available at SF’s China-based Shanghai and Shenzen Heike retail stores.

As a market leader in China with countrywide network coverage, UPS said that SF brings comprehensive service capabilities, as well as the highest brand recognition in the Chinese small package market. And the joint venture meshes SF’s Chinese network, with more than 13,000 service points, and UPS’s globally integrated network coverage among more than 220 countries.

In terms of what this joint venture offers up for customers, UPS cited: greater coverage, additional routing options, increased capacity, and more options for transit times and services.

“We’re delighted to help the many customers in China who will now be in a position to trade more easily across borders and better compete on the global stage thanks to product offerings from the UPS and SF joint venture,” said Ross McCullough, President of UPS Asia Pacific, in a statement. “UPS has an aggressive multi-year growth plan in China. Aligning our two networks will increase our market presence by connecting China’s consumers and manufacturers to the U.S. and around the world with logistics solutions that strengthen cross-border B2B and B2C capabilities. This JV is highly symbolic of UPS’s confidence in long-term growth opportunities in China.” 

In May, UPS Vice President of Public Relations Steve Gaut told LM that there were multiple drivers for this endeavor.

“The partners believe there is a market opportunity to be seized by connecting the more than 13,000 SF service locations in China and the extensive SF customer base with the global reach of the UPS network,” he said. SF is the express shipping leader in mainland China and they have an extensive China vehicle and employee network.  UPS has arguably the largest global network and extensive coverage of the U.S. market.  Our objective is to create a venture that will initially provide Chinese customers with better shipping solutions for the U.S. market.  With the exponential growth in cross-border ecommerce in the future, we expect more demand from U.S. customers who want to buy from small and middle market Chinese companies.”

Gaut also noted that UPS expects to offer international shipping alternatives to Chinese customers that will allow them to have greater access to the US market, initially and more international markets as the business expands.

From a competitive perspective, Gaut said that in addition to its existing international B2B export business in China, this joint venture will help UPS connect with many new small and mid-size customers that today are not using UPS to ship directly to consumers in the U.S.

“The establishment of this joint venture boosts global expansion of Chinese enterprises beyond local borders,” said Alan Wong, Group Vice President of SF, in a statement. “SF and UPS are able to maximise the strengths of both companies to continuously innovate and create more competitive products that deliver strong value for customers.”

UPS and SF said that with the JV approved, there is an option through the JV called Global Reach Plus, which is a deferred express product with the full visibility and reliability of a premium express service, comprised of various customer benefits, including:

• Time-in-Transit Reliability with 5-7 business days deliveries jointly powered by UPS & SF’s combined networks;  
• End-to-End Visibility: Visibility from door-to-door using SF’s tracking tool, integrated with UPS’s industry-leading technologies;
• Single Point of Contact for customer service via SF; shipment pick-up by SF at the origin & delivery by UPS at the destination; and
• Flexibility: Late order cut-off time for shipment pick-ups, and multiple delivery options including the use of UPS My Choice and UPS Access Point network

They also added that they can both use their own assets “to boost operational effectiveness and efficiency for businesses while aligning business processes in order to provide seamless customer care for all parties shipping out of China.”