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May 14 (NBD) -- China's delivery service company S.F. Holdings Group (S.F. Holdings) announced on Saturday the establishment of new express brand Shunxin Jieda, a signal of the Group's foray into China's heavy freight express market.

It is noteworthy that unlike S.F. Holdings which only operates direct stores, the new brand aims to develop mainly by franchising. As a less-than-carload (LCL) express service provider, Shunxin Jieda plans to form a domestic LCL express network in 2 years, to open 12,000 branches nationwide and expand 1300 inter-provincial direct routes by 2020. 

Shunxin Jieda will focus on two major businesses: logistics business including road transport (standard shipping and express delivery), small-size LCL shipping, truck load shipping, standard air freight and other value-added service, and financial business such as financing products for franchisees and operation support. 

The Group's investment in the new express brand revealed its ambition in the heavy freight express market. Before launching the new express service, S.F. Holdings started to offer heavy freight service in 2015.

NBD noticed that as of 31 December of 2017, S.F. Holdings operates 717 heavy goods branches and 21 heavy goods transfer stations across 31 provinces and 289 major cities and regions, with a total area of more than 670,000 square meters. The untaxed net revenue of the heavy goods in 2017 reached 4.402 billion yuan (695 million U.S. dollars), surging 79.93 percent compared to one year earlier.

Xu Yong, chief consultant at express data platform cecss.com, told NBD that large delivery companies tend to provide comprehensive logistic services, while small- and medium-sized enterprises are likely to offer specialized services. By investing in the heavy freight express market, S.F. Holdings has jumped on such trend like other international delivery companies. 

With investments flowing into the the heavy freight express market, seven listed courier service companies have turned to expand their heavy freight delivery business following Deppon Logistics and ANE Logistics, making the niche sector a new battlefield beyond the traditional delivery domain. 

However, in Xu's view, now the heavy freight express market is still at the initial stage of money-burning and it will take at least 2 years for the market to enter the next stage.

Xu also pointed out that with more important players entering the market, it will be more difficult for enterprises to survive. The optimization and reorganization, merger, market segmentation, lean service, personalization, diversification of the model and industry centralization will become the development trend of the heavy freight express market. Those who can gain the segmented or personalized market will win the current competition.

Email: zhanglingxiao@nbd.com.cn