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Future tech

China’s biggest courier firm could soon deliver parcels by drone

SF Holding, China’s largest listed courier provider and parent of SF Express, has been granted a licence to operate logistics drones in the country

PUBLISHED : Wednesday, 28 March, 2018, 4:02pm
UPDATED : Wednesday, 28 March, 2018, 10:20pm

Chinese courier company SF Holding said it has won a licence to operate drones, opening up a potential new frontier for package delivery in the world’s second-largest economy.

SF, the nation’s largest listed courier provider by market value and parent of SF Express, said late on Tuesday that one of its units was granted China’s first ever drone operation licence and that the firm was now legally able to operate logistics drones.

Two phone calls to the Civil Aviation Administration of China were not answered on Wednesday, when SF’s shares jumped more than 5 per cent, the biggest contributor to gains on the Shenzhen Composite Index.

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Package delivery is key in the world’s biggest consumer market, where the rise of e-commerce and mobile payments has shifted shopping for everything from groceries to factory parts online.

More than 40 billion parcels were shipped in mainland China last year – that is estimated to be about 110 million packages a day – and volumes are expected to reach 49 billion parcels this year, according to the State Post Bureau, China’s delivery-industry watchdog.

Delivery firms have been eyeing the use of logistics drones since about 2015, when e-commerce giant Alibaba Group Holding partnered with Shanghai YTO Express Logistics in a one-time test – delivering packages of ginger tea by drone. New York-listed Alibaba owns the South China Morning Post.

Rival online retailer JD.com, which has its own delivery service, was reported to have started making drone deliveries last year after testing the service in some rural areas in 2016.

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Nasdaq-listed JD.com launched what was likely the world’s first commercial drone delivery programme for e-commerce in rural locations outside Beijing, as well as those in the provinces of Jiangsu, Shaanxi and Sichuan.

JD.com said it had a fleet of more than 30 custom-built drones when it initiated the service in November 2016. Those drones were designed to transport and deliver packages weighing between five to 15 kilos and cover distances as far as 50 kilometres.

Shares of SF’s rivals declined in Chinese trading, with YTO Express Group – the parent of Shanghai YTO Express – down as much as 2.4 per cent and STO Express Co falling as much as 1.2 per cent in the mainland market.