Turkish Cargo forms e-commerce JV with ZTO Express and PAL Air

Turkish Airlines and its cargo arm Turkish Cargo have signed an e-commerce sector joint venture (JV) with Chinese express delivery firm ZTO Express and Hong Kong based PAL Air Ltd – creating a new freight integrator.

The agreement was rubber-stamped in Istanbul and the carrier says it is a “huge strategic step” prior to the opening of the Istanbul New Airport and a “game-changer” for the global express transport business.

It was signed by Turkish Airlines chairman of the board and the executive committee, İlker Aycı, ZTO Express chairman Mei Song Lai and PAL Air vice chairman Vivian Lau.

The new global express JV company which will be based in Hong Kong, will include all door to door logistics activities; trucking, collection & distribution, freight transportation, cross docking and final mile delivery along with warehouse management, order and supply chain management when necessary.

Aycı said the global express/courier JV company will mainly focus on global e-commerce market with full door to door services.

“The joint venture, after reaching quickly to fully functional and operational levels, is expected to take place within the world’s largest integrators. In 5 years time it will generate over $2 billion of revenue. The growth is expected to continue gradually parallel to the e-commerce demand,” he said.

He added: “The Istanbul New Airport will be opened by 29 October this year and it will function as Turkish Airlines main operating hub. This mega hub, will gradually provide Turkish Cargo up to 4 million tonnes of cargo handling capacity, becoming one of the top five air cargo brands of the world.

“The flow of e-commerce products globally with this Joint Venture and via Istanbul Mega Hub; will provide maximum value to our customers worldwide.”

ZTO is the world’s largest parcel distributer, and moves 28 million parcels a day and has the widest express delivery coverage in China. Alibaba Group is to buy 10 per cent of ZTO Express as part of an investment of $1.38 billion. The deal is set to close in June.

PAL Air Ltd. has launched a B to C Wholesales Postal Express Service including last mile fulfillment to the Retail Express Services Providers in Hong Kong, China, Thailand, Vietnam, India and the USA.

Lai said: “In 2017, ZTO’s annual parcel volume reached 6.22 billion parcels. As the largest express delivery company in the world, ZTO is an open platform built on core values of ‘Co-create and Share’. Because of the innovation and globalization of new retail and e-commerce, China’s logistics industry is provided with tremendous new growth opportunities.

“ZTO will continue to solidify and strengthen its competitive advantage for domestic growth, and will actively explore and expand international markets, building cross-border business as an important growth engine for the future.

“The cooperation between the three partners will form synergy by combining strong core competencies and integrating key resources, and will undoubtfully effect positive progress in the areas of global express delivery, warehousing, cargo freight, and aviation route development and more, and will ultimately benefit traders and consumers globally.”

PAL Air Ltd. is a member of Pacific Air Holdings Ltd. and operates as a general sales and services agent (GSSA), neutral wholesales (cargo and express) and project consulting services.

Lau said: “We are in one of the most exciting times of the human history. The IoT, robotics, artificial intelligence, 3D printing, VR/AR/MR will unleash unprecedented opportunities and challenges. To add to this list, the world is awaiting the launch of 5G which promises 10 gigabits per second, a hundred times faster than the current 4G technology. All these will provide further fuel to the already explosive e-commerce development.

“PAL is honored to have played a role in creating a three parties venture that will unleash the best of three worlds, together with two global giants, Turkish Airlines and ZTO. Turkish Airlines, ZTO, and PAL looks forward to the creation of a world class integrator.”

Along with booming e commerce volumes, the global express/ xourier industry continues to grow strongly. In 2016, this industry had around $260 billion in revenue and is expected to reach $340 billion in 2020 and to more than $400 billion in 2023.

Turkish Airlines also say the JV will expand its business scope and provide a seamless service to its customers from pickup to line-haul to door-to-door delivery while ZTO, and Pal Air will broaden their market focus from domestic China to global markets by using Turkish Airlines’ worldwide network.