Shenzhen-based SF Holding, one of China’s major express courier services, will be the majority shareholder in the partnership.
The deal involves a part of Illinois-headquartered Havi’s existing logistics business in Greater China, which it has developed over 40 years.
The joint venture will take advantage of SF’s leading position in China’s express logistics market and its growth in the cold chain segment there, alongside HAVI’s expertise in cold chain and multi-temperature distribution technology.
Eddie Huang, SF’s assistant chief executive, said: “The new joint venture will provide customers throughout the cold chain market with end-to-end solutions and services.”
He noted that SF’s experience in the business-to-consumer market will complement Havi’s business-to-business strength
Havi chief executive Russ Smyth said both companies “see huge potential and great opportunities in China’s cold chain market”.
Smyth added that both companies “see huge potential and great opportunities in China’s cold chain market”.
China lagging in logistics
The news is important for Chinese logistics as its cold chain lags a long way behind operations in developed economies due to a lack of infrastructure and organisation.
Despite the country’s relentless pace of growth and consumers’ growing demand for fresh food, Chinese companies largely haven’t yet make the required investments in cold transportation, storage, and distribution infrastructures needed to support the market.
According to one recent report, logistics firms’ concerns over liability prevent them from offering door-to-door perishables services.
Yet cold storage capacity has grown by over 800% in China over a period of eight years, despite which the country that still hasn’t closed the cold chain gap.
Plans for drones
The SF-Havi announcement comes just as the Chinese logistics company was granted the first licence to operate logistics drones in China at a time when there is much hype over e-commerce deliveries.
The country’s biggest listed courier saw its stock jump by more than 5% on the back of the announcement, making it the star performer on the Chinese stock market that day.
Amid the rise of e-commerce, online giants such as Alibaba have been delving into the use of logistics drones for the last couple of years. In 2015, Alibaba made its first deliveries of ginger tea by a drone operated by YTO Express Logistics in a one-time test.
Rival JD.com, which has its own delivery service, has reportedly been making and testing its own delivery drones in rural areas.