China's Express Firms Tap Capital Markets to Expand

Shanghai-based logistics company Deppon Logistics has become the seventh private express logistics company in China to go public after receiving approval from the China Securities Regulatory Commission for a planned Shanghai listing.

The move follows earlier listings by STO Express, YTO Express, ZTO Express, Shanghai Yunda Express, Best Inc. and SF Express, which have already debuted on Chinese and overseas exchanges.
Deppon Logistics, which has not published a date for the IPO, first announced its intention to list in July 2015, amid a wave of similar announcements by big players in China’s rapidly expanding parcel delivery industry.

Initial public offering to finance expansion
According to a preliminary IPO document aired last March, the company will issue no more than 150 million shares to raise 2.98 billion yuan (US$458 million) to build branches and buy new vehicles and equipment.
Deppon Logistics offers less-than-truckload transportation, full truck load transportation, delivery, and warehousing management, as well as supply chain management and cross-border services. The company was founded in 1996.


Remarkable ascent
China's express delivery services have experienced rapid growth in recent years on the back of the country's e-commerce boom. In 2016, 30 billion packages were delivered in China - 23 for each of the country's 1.3 billion people. Close to 90% of these packages passed through hands of private couriers like Deppon and its rivals, according to the State Post Bureau.
The country has about 19,000 courier companies, most of which are small businesses in a fragmented market. Capital inflow is revving up competition and forcing out players.
Xinhua quoted Xu Yong, a senior consultant for the courier industry as saying that with the help of the capital market, private courier companies can upgrade, increase investment, widen their global networks and improve services.
The State Post Bureau said that in the first 11 months of 2017, a total of 35.86 billion parcels were delivered, up 28.6% year-on-year. The sector generated 443.74 billion yuan in revenue during the period, up 25.2% year-on-year. By 2020, China expects to become the world's largest express delivery market with a business revenue of 800 billion yuan.

Nol van Fenema

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