Fast-growing Chinese firm STO Express has launched an exclusive weekly air express service between Hong Kong and Prague to distribute Chinese goods across Europe.
It is thought to be the first regular freighter operation to Europe to be undertaken by a Chinese express delivery firm, according to Hong Kong Air Cargo Terminals Ltd (Hactl), which is providing handling services in Hong Kong.
Cargo airline SW Italia (part of Silk Way West Airlines) is operating the service with a B747-8F but the aircraft is decked out in STO Express livery.
Hactl Chief Executive Mark Whitehead said: “We are delighted to extend our relationship with SW Italia to include this new operation, which clearly signals the growing role of the mainstream airfreight industry in e-commerce logistics.”
Ignazio Coraci, President and CEO of SW Italia, added: “We look forward to working with STO Express on this exciting new project, and are very happy to entrust the vitally important ground handling element of the operation to our long-term service partner Hactl.”
STO Express is planning to operate up to three cargo flights per week between Hong Kong and the capital of the Czech Republic, a report in the China Daily newspaper said. The company is also setting up its own truck fleet to carry goods from Prague to countries across Europe, including the UK, the report added.
It went on to quote the vice-president and operations director of STO Express Europe, Wayne Yu, who said: "Having our own cargo plane and truck fleet will save costs for customers, reduce delivery times by 3-7 days and we can now provide customers with a complete delivery tracking service."
A report in China Daily published last month said STO Express was looking to capture a quarter of the China-related market share from global delivery players like DHL, UPS, TNT and FedEx in the next one or two years, as its fees are only half of theirs.
STO Express' announcement on its expansion into Europe coincides with the spectacular growth in the cross-border e-commerce sector.
The China Daily report highlighted statistics from Chinese research firm iResearch showing that China's cross-border imports grew from 100 billion yuan ($15 billion) in 2014 to 150 billion yuan last year and are forecast to hit 210 billion yuan this year. It also noted that, according to joint research by Accenture and AliResearch, Alibaba Group's research arm, the global cross-border e-commerce market stood at $230 billion in 2014, and is projected to grow to $1 trillion by 2020.
A year ago, STO Express concluded a US$2.6 billion 'reverse merger' deal with Shenzhen-traded valve maker Zhejiang IDC Fluid Control. Under a ‘reverse merger,' companies are legally acquired by smaller firms that are already listed on local stock exchanges. These deals are known as ‘back-door listings’ which bypass China's lengthy initial public offering (IPO) process.
STO Express' rivals, such as SF Express, YTO Express, STO Express and Yunda Express, have also sought IPOs through so-called ‘reverse mergers’ to finance the development of their domestic and international activities. Earlier this autumn, China’s fast-growing ZTO Express floated on the New York Stock Exchange to raise up US$1.5 billion.
In a separate move, ZTO and USPS have signed a cooperation agreement covering e-commerce distribution between China and the USA.
