Despite signs of a slowdown of imports into China, Singapore Post (SingPost) remains bullish on the prospects for e-commerce flows into Asia’s largest economy. The postal agency has upped its stake in Shenzhen-based e-commerce provider 4PX Information Technology.

SingPost forked out US$25.6 million to acquire an additional 17.91% position in 4PX, one of China’s top e-commerce cross-border players, whose scope of services ranges from forwarding, express delivery and warehousing to software and consulting services for e-commerce vendors. The postal operator now holds a 36% stake in the Chinese firm.

4PX runs warehouses in China, Australia, UK, Germany and the US, employing north of 2,600 staff. The company has over 20,000 customers in more than 50 locations in China and globally.

“The additional investment in 4PX, with its extensive logistics capabilities in warehousing, express delivery and freight forwarding, is a key part of SingPost’s strategy to strengthen our integrated end-to-end e-commerce logistics solutions and to leverage on the rapid growth in China’s e-commerce activities,” said Goh Hui Ling, deputy CEO (international mail) of SingPost.

With general cargo growth in the doldrums, logistics providers are keen on developing a footprint in e-commerce, which promises rich pickings and robust growth momentum. According to one estimate, global B2C volume is expected to reach US$2.26 trillion a year by 2020, with an annual growth rate of 15 to 20%.

International carriers are particularly gung-ho on China, citing Chinese consumers’ rising cravings for international brands. Anselm Eggert, head of e-commerce at Lufthansa Cargo, stated that they are showing strong interest in European brands, especially health and beauty products.

Freighter leasing firm Airborne Global Solutions invested US$16 million last September for a 25% stake in the nascent United Star Express, a new Chinese freighter operator that is expected to take to the skies halfway through this year. Its partners in the venture are Chinese Boeing 737 operator Okay Airways, a developer and an investment company, and Vipshop, the third-largest e-tailer in China, according to AGS president Rich Corrado.

Postal agencies are pushing aggressively into this arena, their eagerness intensified by a need to make up for the ongoing shrinkage of their traditional letter mail business. With their delivery networks they have a strong advantage over competitors in the critical final-mile segment in their home markets, but they are also increasingly targeting international flows to other markets.

Japan Post established its own website in China last autumn to offer Japanese merchandise to Chinese consumers. Orders are consolidated and moved by ocean vessel to Shanghai for overland distribution.

China Post has been in hot pursuit of e-commerce business, which is reflected in the rapid growth of China Postal Airlines. According to one source, China Southern Airlines’ decision last year to bring two parked 747-400 freighters back into service was prompted by the Chinese postal agency.

To develop its traffic from the postal agencies of Hong Kong and China, Cathay Pacific has implemented barcode scanning of mail at its stations in China and in Hong Kong. This enables the electronic transmission of departure, transit and arrival information. In a second phase, the airline is looking to integrate various IT interfaces – from booking to space management and mail warehouse transit management – to establish real-time data flow, said Mark Sutch, the airline’s general manager of cargo sales and marketing.

For now many airlines view postal business as the biggest inroad into B2C e-commerce, but this will likely change. Eggert envisages greater involvement from carriers down the road. At this point Lufthansa is studying the market in order to be able to develop more targeted options later on.

“I think in the future we will go beyond mail. I think the industry needs to think how to work together with partners,” Eggert said. This will require closer alignment, including some degree of IT integration. In light of the fact that the air cargo industry does not have a stellar track record in developing joint solutions, this will be a challenging avenue for operators to pursue, he added.

By Ian Putzger

Air Freight Correspondent | Toronto