Arms of CRC, SF form cargo venture

A subsidiary of railway operator China Railway Corp has formed a joint venture with an arm of package delivery firm SF Holding to expand its logistics presence and boost mixed ownership reforms.

The joint venture, which was announced on Wednesday, is also seen as a major achievement in optimizing the country's freight transportation structure.

China Railway Express Co Ltd, the bulk cargo delivery arm of CRC, will hold a 55 percent stake in CR-SF International Express Co Ltd, the new venture, while the rest will be held by an affiliate of Shenzhen-listed SF Holding.

High-speed train cargo service will be the new venture's major business. It plans to run high-speed freight trains, develop railway delivery platforms for cross-border e-commerce and establish logistics centers for storage, packaging, processing and delivery services.

Huang Min, deputy-general manager of CRC, said the new venture is another significant achievement in CRC's efforts to promote diversified ownership and will enhance its backbone role in the country's logistics sector.

In July, the company had teamed up with Tencent and Geely Automobile to set up a firm for providing Wi-Fi services in high-speed trains.

Aiming to match the world's top railway network in China, Huang said CR-SF will give full play to both sides' railway network resources, mobile internet and intra-city delivery system.

China has the world's most extensive high-speed rail network, with 22,000 kilometers of track currently in use, but it is used to only transport passengers. Since 2016, they have opened it for product deliveries of goods sold via online platforms.

But it still accounts for a very small portion of China's total cargo transport capacity, said Yang Daqing, a researcher at the China Society of Logistics.

"The structure of China's delivery system has been disproportionate for a long time, while highway transportation accounts for 70 percent," he said, adding that cooperation can gradually improve the structure by ramping up high-speed railway's proportion.

According to China Business Journal, the revenue earned by high-speed railway deliveries accounts for only 4 percent of CRE's total, but soared 20 percent in the first four months of 2018 over the same period in 2017.

The two companies last November jointly launched a fast service along the Beijing-Shanghai high-speed railway, and so far it has expanded to 161 lines in 44 cities, having delivered about 1.5 million packages.

Xu Zhijun, vice-chairman of CR-SF and vice-president of SF Holding, said SF is actively turning some transportation capacity from highways to railways.