Asia

China's Fast-Growing Answer to FedEx Is Researching Drone Deliveries


Workers distribute packs at SF Express in Shenzhen

Photograph by ChinaFotoPress via Getty Images

Workers distribute packs at SF Express in Shenzhen

Quick, which company is researching delivery-by-drone to complement its fleet of jets? (Amazon.com (AMZN) doesn’t count.)

It’s a Chinese company called SF Express. Look for its gray uniforms and black vans if you’re in Hong Kong or any major Chinese city. SF has 250,000 staff members and owns 15 airplanes, including a Boeing 737-300. And then there’s its drone: Powered by eight propellers, it was spotted last year flying 100 meters above ground in Shenzhen, SF’s headquarters city, carrying packages that bore the company’s letters.

As Bloomberg Businessweek reported last month, China’s express shipping industry is fragmented, marked by price wars and—all too often—broken packages. It’s nonetheless booming, alongside the growth of e-commerce, led by Alibaba Group’s Taobao.com. The number of deliveries nationwide in 2013 was six times larger than in 2008, as revenue for the express-delivery industry more than tripled, to 144 billion yuan ($23 billion).

Xu Yong, a chief consultant at CECSS.com, a website that studies China’s logistics sector, doesn’t attribute the growth to Taobao. “On the contrary, Taobao’s boom is made possible by the low cost of the courier services,” he says.

So far, privately owned SF, which charges more than its domestic competitors, appears to be an industry leader. Many industry watchers say it’s faster than others—and takes better care of parcels in transit. The company says its revenue last year was close to 30 billion yuan ($4.8 billion.)

As for its drone, the company told Bloomberg News in February that it had set no timetable for drone delivery. The company said this week that it had no new information.

Some Chinese papers have compared SF with FedEx (FDX), the U.S.-based delivery company that employs 300,000 people globally. FedEx reported revenue of more than $44 billion in 2013.

The two companies don’t begin to compare in size “if you look at service areas globally or number of jets,” but it’s a different story in China, where SF is much more prominent, Xu said.

“Here, they are not in the same league,” he said.

SF’s founder, Wang Wei, was born in 1971, the year FedEx was founded in Little Rock, Ark. He was one of his company’s first delivery men when SF started in 1993, and he laid the company’s foundation by seizing the rail route between Hong Kong and neighboring Guangdong—a classic growth story that starts from the bottom.

Wang used a similar work-your-way-up approach when the company branched into air delivery in 2009. Six young men were picked from within the company, including its ground-delivery corps, to be among SF’s first pilot trainees.


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Companies Mentioned

  • AMZN
    (Amazon.com Inc)
    • $306.54 USD
    • 6.64
    • 2.17%
  • FDX
    (FedEx Corp)
    • $176.87 USD
    • 2.65
    • 1.5%
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