Cold-chain competition heats up
( China Daily )
Logistics companies are racing to expand their cold-chain delivery services in China as the market heats up thanks to continuing consumption upgrades.
SF Holding, the listed arm of delivery service provider SF Express Co Ltd, and Havi Logistics Services established a cold-chain joint venture called New Havi in Shenzhen, Guangdong province, on Friday.
Shenzhen-listed SF Holding is the majority shareholder of the joint venture.
New Havi will manage part of Havi's existing logistics business in China. United States-based Havi launched its business in China 40 years ago, providing delivery services for McDonald's.
"Cold-chain delivery is one of SF's key strategies and I value the international standard of Havi's service very much. One of the new firm's missions is to provide this standard to more clients and upgrade the overall domestic service level," said SF Express Chairman Wang Wei.
SF's cold-chain transportation revenue grew close to 60 percent year-on-year in 2017, driven by the rapid growth of fresh food and medicine delivery, according to its annual financial reports.
Yang Daqing, contributing researcher at the China Society of Logistics, said, "SF's advantage is its customer network and Havi has rich resources in company clients."
But, he said, efforts should also be made to achieve a balance between warehouse capacity and demand volume, otherwise growth will not remain stable and sustainable.
"The nation's cold-chain industry is still at an early stage of development, though it has been growing at a speed of 20 percent annually in recent years, driven by consumption upgrades," he said.
According to the China Federation of Logistics and Purchasing, China's cold-chain logistics market scale was about 250 billion yuan ($36.5 billion) last year and is expected to reach 470 billion yuan by 2020.
"The total revenue of the top 100 cold-chain logistics firms in China increased by 30 percent in 2016, but 90 percent of them are regional, or focusing on transportation only," said Chen Wen, an analyst at Ping An Securities, adding that no "super big player" has emerged in the industry yet.
Many traditional express companies, such as STO and YTO, have included the cold-chain sector in their key business strategies, and are setting up subsidiaries, new warehouse centers and related services.
E-commerce platforms are also entering the cold-chain market. China's second-biggest e-commerce firm, JD, teamed up with Japanese logistics giant Yamato Transport Co Ltd last year, in a bid to strengthen its cold-chain and cross-border services.
Offline-to-online retailer Suning.com Co Ltd had opened 17 cold-chain warehouses by the end of July, 2018.
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