China Shipping, Alibaba join up for integrated logistics platform

State-owned freight firm partners with e-commerce giant to offer integrated platform

PUBLISHED : Saturday, 12 July, 2014, 12:52am
UPDATED : Tuesday, 15 July, 2014, 6:42pm

State-owned China Shipping Group, through two subsidiaries, will partner with Alibaba to establish an integrated logistics platform, combining its traditional shipping services with e-commerce.

China Shipping Network Technology (CSNT), a provider of transport information products indirectly held by China Shipping Group, said yesterday it signed a framework agreement for cooperation with Alibaba.com and with sister company China Shipping Container Lines (CSCL), the biggest operator of container vessels in China.

The three companies will "put in resources to build an integrated service platform for international shipping which both China Shipping's clients and Alibaba's clients can use for online logistics price inquiry, online ordering, online settlement and online goods tracking", the announcement said.

The companies did not put a price tag on the deal or reveal the details.

The mainland-listed shares of both CSNT and CSCL surged by the daily limit of 10 per cent on the news.

Kelvin Lau, an analyst with Daiwa Securities, said it remains to be seen how shippers and freight forwarders react to online settlements as the industry has traditionally preferred direct debit as the means of payment.

CSCL reported a net loss of 262 million yuan (HK$329 million) last year.

Geoffrey Cheng, an analyst at Bocom International, said the move will see CSCL enter the "last mile" business, referring to the last leg in the supply chain before products reach their final destination

He was pessimistic about the venture because this sector typically has low profit margins.

"As the last mile market in China is already dominated by a few companies, it will be difficult for newcomers to make money. Even Alibaba's own logistics network project Cainiao is not doing well," he said.