Turkey's national flag carrier Turkish Airlines (THY), China's ZTO Express and Hong Kong's PAL Air will form a logistics company in Hong Kong, THY Chairman İlker Aycı said Monday. The joint venture will operate under the name of Global Express.
The partnership is expected to create broader impact across the world. The agreement was signed by Aycı, ZTO Express Chair Mei Song Lai and PAL Air Vice Chairman Vivian Lau during a ceremony in Istanbul.
Aycı said at the signing ceremony that the agreement lays the groundwork for a joint venture that will operate as a global shipping company with significant focus on the global e-commerce market. The venture will provide door-to-door shipping services, he added.
Aycı stated that THY has already been cooperating with Hong Kong's PAL Air in shipping operations for a long time. He said they were pleased with the strong partnership it would create.
The partners aim to make the new joint venture one of the world's largest integrators and generate a revenue of $2 billion within the first five years of its operation. They expect growth performance in proportion to the rising demand in the e-commerce sector.
Istanbul's new airport, which will start operations in October, will be the main operational base of THY. Aycı remarked that thanks to the mega center at the new airport, Turkish Cargo will have a capacity to handle four million tons of cargo to become one of the top five air cargo brands in the world. "The new joint venture therefore will capitalize on the growth of Turkish cargo," he said.
"The new joint venture and Istanbul as the mega transport hub will enable us to make sure that e-commerce products will be delivered to our customers around the world with excellent service quality," Aycı stated.
The new Hong Kong-based joint global express company will run door-to-door logistics operations, packaging, moving, on-location pick ups, distribution, freight transportation, cross docking and transportation to the final delivery point. The company will also offer warehouse, order and supply chain services when necessary.
In addition to the delivery of 28 million parcels per day, ZTO has the broadest express delivery network across China and is the express shipping company that carries out the most deliveries in the world.
One of the largest e-commerce firms, Alibaba Group has recently announced that it will buy 10 percent of ZTO Express for $1.38 billion, the transaction will be completed in June. If Alibaba's plan is realized, the firm will be one of the partners of ZTO.
PAL Air has an expansive network that includes door-to-door express shipping operations in Hong Kong, China, Thailand, Vietnam, India and the U.S.
Lai said, "ZTO's annual parcel volume reached 6.22 billion parcels in 2017. The Chinese logistics industry has capitalized on growth opportunities in the retail and e-commerce system thanks to the innovation and globalization in the sector."
Lai highlighted that the new joint venture of THY, ZTO and PAL Air will record highly positive developments for global express delivery, storage, air cargo and aviation routes and will provide great benefits for corporations and individuals across the world.
PAL Air Vice Chairman Lau stressed that the innovative technological developments across the world including the internet of things, robotics, artificial intelligence and 5G, point to the incredible developments in the fast-growing e-commerce sector.
With quickly expanding e-commerce volumes, global shipping and freight transportation continues to record outstanding growth figures. The sector generated $260 billion in revenue in 2016. This figure is expected to reach $340 billion in 2020 and $400 billion in 2023.
THY flies to more than 300 destinations in 121 countries across the world and enjoys the title of the airline that runs the broadest aviation network in the world on a country-basis. The new joint venture will enable THY to expand its operational capacity and offer point-to-point delivery services. ZTO and PAL Air will be able to shift their market focus from China to global markets by benefiting from THY's worldwide operations and expansive network capacity.