As competition intensifies in China’s logistics market, e-commerce giant Alibaba is deepening its collaboration with major domestic couriers to explore opportunities in international and digital businesses.
In a public filing to be dated on Wednesday, Shanghai-listed YTO Express said it will transfer 12 per cent of the stake in YTO Express valued at 6.6 billion yuan ($960 million), or 17.406 yuan per share, to Alibaba.
The deal will increase Alibaba’s shareholding in YTO Express to 22.5 per cent upon completion of the transaction.
Zheshang Securities Co Ltd industrial analyst Kuang Peiqin said: “For years, Alibaba has been consistently strengthening its collaboration between its logistics arm, Cainiao Smart Logistics Network, and major express delivery firms.”
To date, Alibaba has acquired a 33 per cent stake in Best Inc, 8.7 per cent of ZTO Express, 14.65 per cent in STO Express, and two per cent in Yunda, public information showed.
Huatai Securities Co Ltd industrial analyst Yuan Ding said: “The Chinese tech giant’s increased shareholding in these couriers is expected to raise the efficiency of the Chinese logistics sector, and intensify the competition among express firms as well.”
China’s express delivery business soared from 3.67 billion packages in 2011 to 63.52 billion units last year, a compound annual growth rate of 42.82 per cent. The figure stabilised to 22.05 per cent growth in the first half this year with 33.88 billion parcels delivered, data published by the State Post Bureau of China show.
More players joined the logistics sector in the second quarter, and a price war is looming among major delivery companies.
China Merchants Securities Co Ltd senior analyst Chen Zhuo said: “After announcing a 42 per cent rise in the half-year report thanks to its advantage in air cargo business, SF Express saw its share price soar recently.”
Likewise, operating a fleet of 12 cargo aircraft, YTO Express reported 52.49 per cent rise in business volume, and a 40.63 per cent year-on-year increase in its net profit in the second quarter of the year.
The share purchase deal is part of the strategic cooperation inked between Alibaba and YTO Express, as the two parties vowed to collaborate in promoting express logistics, air freight, international networks and supply chains, and information technologies, the Shanghai-based express delivery firm said.
“The keys of the strategic collaboration are globalisation and digitalisation,” said a separate filing of the listed company.
Since the outbreak of Covid-19, YTO’s cargo fleet has carried a number of flights for Cainiao to destinations which include Malaysia and Pakistan.
Currently, YTO Express is partnering with Cainiao and China National Aviation Corp (CNAC) in establishing a new HK$12 billion (US$1.5 billion) logistics hub at Hong Kong International Airport.
The 380,000sqm facility is expected to integrate the three parties’ strength in the fields of air cargo transport, e-commerce, and express delivery networks. It is scheduled to start operations in 2023.
YTO Express and Cainiao are co-developing logistics facilities and establishing smart logistics big data applications, Alibaba said.
The strengthened cooperation in capital, industrial and technology will further promote the high quality development of YTO Express, it said.
Industry experts said concrete details are needed to transform their collaboration from capital to business, and further strengthen their respective competitiveness.
Kuang said: “The deepening of collaboration between Alibaba and YTO Express, which started more than a decade ago, will leverage YTO Express’ expertise in air cargo and distribution.
“And it will also accelerate Alibaba’s establishment of a logistics system to match its scale of e-commerce business,” he said.
He added that the purchase of YTO Express’s stakes at a price that is more than four per cent higher than its closing price is proof of Alibaba’s confidence in the courier’s future development.
CHINA DAILY/ASIA NEWS NETWORK