DHL heralds major deal to offload Chinese supply chain operations to S.F. Holding

Late last week, global logistics services provider Deutsche Post DHL Group said it had brokered an agreement in which its China-based supply chain operations will be sold off to S.F. Holding, a Chinese integrated logistics services provider, for $5.5 billion (in Chinese Yuan currency or slightly over $100 million U.S.).

DHL officials said that through this deal Deutsche Post DHL Group and S.F. Holding will enter into a ten-year strategic partnership to expand supply chain operations in China, with Deutsche Post DHL Group’s supply chain business in China to be incorporated into S.F. Holding and subsequently operate as a co-branded organization.

This deal focuses primarily on DHL’s supply chain business operations in mainland China, Hong Kong, and Macau, with the company explain it has “no bearing” on Deutsche Post DHL Group’s business activities in international express, freight transportation, and e-commerce logistics services in China.

In regards to the ten-year strategic partnership, Deutsche Post DHL Group will received an upfront payment of $5.5 billion (Chinese currency) over the next ten years, and S.F. Holding will have access to Deutsche Post DHL Group’s supply chain services, management expertise, transportation and warehousing technology.  S.F. Holding's services include: express delivery, cross-border e-commerce courier, warehousing and distribution and other value-added logistics services in China and international markets.  In Feburary 2017, the company went public and is now listed on the Shenzhen Stock Exchange under Ticker Symbol 002352.

And Deutsche Post DHL Group said that this strategic partnership will allow it to continue to participate in the Chinese supply chain market and also leverage S.F. Holding’s domestic infrastructure, distribution network and broad base of local customers and also spur the expansion of the co-branded customer base of the two companies.

“The joint capabilities of Deutsche Post DHL Group and S.F. Holding will create a unique platform to meet the need for a high quality end-to-end supply chain provider in China,” said Frank Appel, CEO Deutsche Post DHL Group, in a statement. “S.F. Holding’s local market expertise in China has real advantages for our customers across all industries including technology, healthcare, retail, automotive, and e-commerce. Combined with our global operations standards and network support, the agreement provides a solid foundation to continue exploring further opportunities in China in the coming years.”

Evan Armstrong, president of supply chain consutancy Armstrong & Associates, said that this deal is a way for DHL's Supply Chain business to strengthen its market position in greater China, given that  S.F. Holding Co., Ltd. (Formerly SF Express) is the second largest courier in China, after China Post.