Mar. 14 (NBD) -- Chinese express logistics titan S.F. Holding Co., Ltd. ("S.F.") gets a strong partner in the cold chain segment.
The courier announced Tuesday it will establish a cold chain logistics joint venture in China in partnership with Illinois-based HAVI Group ("HAVI").
HAVI is one of the world's leading supply chain management companies, and has the world's cutting-edge cold chain and multi-temperature food delivery technologies. The company has built a presence in more than 100 countries and has been operating in China for nearly 40 years.
According to S.F., the newly established joint venture will be running part of HAVI's business in China, and will grow into an industry-leading open platform in terms of business size, growth speed, and profitability.
S.F.'s ambition in cold chain sector
Cold chain transportation has been mature in foreign countries but is still at its fledgling stage in China, Xu Yong, chief consultant for the express and logistics website cecss.com, said to NBD in an interview. By building a joint venture with HAVI, S.F. can get access to professional cold chain technologies and management methods, he held.
In fact, the Chinese logistics titan's arrangement in the cold chain industry started a long time ago.
As early as 2012, S.F. rolled out its own online grocery store, S.F. Best Store. This, on one hand, was a decision made to tap into the fast-growing fresh food ecommerce market, and on the other hand, it offers a platform for S.F. to test its cold chain-based home delivery solutions.
Two years later, the S.F. launched S.F. Cold Chain LTL. This demonstrated the important position of the cold chain business in S.F.'s strategic plan.
To date, cold chain has become the fastest-growing business of S.F. According to the listed company's financial results, its revenue from the cold chain business totaled 1.034 billion yuan (163.6 million U.S. dollars) in the first half of 2017, representing a rise of 85.56 percent year over year and accounting for 3.22 percent of the company's total.
The partnership with HAVI reveals S.F.'s strong ambition in the new retail market, especially the fresh food cold chain sector.
A report on cold chain logistics by CITIC Construction stresses that improving supply chain system including cold chain transportation is critical to the growth of new retail.
Great potential for cold chain
E-commerce giants and couriers like JD.com and Alibaba Group have been making big pushes into the cold chain market because of the new retail industry's heavy reliance on supply chain systems, industry insiders told NBD.
Currently, consumers in more than 300 cities are benefiting from JD.com's fresh food logistics services, with same-day and next-day delivery services being available in over 220 cities.
Alibaba made forays into the fresh food e-commerce sector in 2013. To date, the conglomerate's logistics unit Cainiao Network has set up five fresh food delivery centers across China, covering around 80 percent of the whole country.
Moreover, CYTS United Logistics Technology Group Co., Ltd.'s cold chain logistics unit has signed a letter of intent with Japan's CBC Co., Ltd to jointly explore China's cold chain logistics and trade market. Logistics companies like EMS and YTO Express also flocked into the niche sector to grab a share.
Data from Analysys International shows that China's fresh food e-commerce market grew from 4.05 billion yuan (640.8 million U.S. dollars) in 2012 to 91.39 billion yuan (14.5 billion U.S. dollars) in 2016, delivering a compound growth rate of 118 percent. The market size is predicted to hit 350 billion yuan (55.4 billion U.S. dollars) by 2019.
Xu Yong noted that cold chain has great development potential in China, and market players should tap deeper into a niche sector, rather than casting the net wide.