Turkish Airlines, ZTO, PAL Air enter into JV to tap global ecommerce market

June 12, 2018: Turkish Airlines, ZTO Express and PAL Air Ltd ink memorandum of understanding (MoU) to build a joint venture company to operate as a global express or courier company. The main focus will be on global e-commerce market with full door to door services.

“We are now delighted to make this strategic move into Global Express business together with the strong partnership of ZTO, the best and largest express company from China and our long term cross border forwarding partner PAL Air Ltd from Hong Kong. The joint venture, after reaching quickly to fully functional and operational levels, is expected to take place within the world’s largest integrators. In five years’ of time it will generate over 2 billion USD of revenue. The growth is expected to continue gradually parallel to the e-commerce demand.” M Ilker Ayci, chairman of the board and the executive committee, Turkish Airlines.

Istanbul New Airport will be opened by 29th of 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 JV and via Istanbul mega hub will provide maximum value to our customers worldwide.

The services of the new 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. It will also include warehouse management, order and supply chain management when necessary.

ZTO is the world’s largest parcel distributer, by daily 28 million parcels and additionally having the widest express delivery coverage in whole China. In fact, very recently global giant Alibaba Group announced that they were to buy 10% of the ZTO Express through an investment of USD 1.38 billion, deal expected to close within June.

Speaking at the ceremony, ZTO Express chairman Mei Song LAI commented, “Due to the innovation and globalization of new retail and e-commerce, China's logistics industry is provided with tremendous new growth opportunities. 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 on the other hand, has launched a B2C wholesales postal express service including last mile fulfillment to the retail express services providers in Hong Kong, China, Thailand, Vietnam, India and US.

Pal Air Ltd Vice-Chairman Vivian 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.”

Along with booming e commerce volumes, global express/courier industry continues to show outstanding growth rates. In 2016, this industry had around US $260 bn revenue realization and it is now expected to reach US $340 bn in 2020 and to more than US $400 bn in 2023. With this partnership all sides are engaged to increase their capability and exposure significantly.