Australia Post is delivering in its Chinese joint venture

Australia Post’s joint-venture logistics company in China, Sai Cheng, is tipping a growth rate of more than 40 per cent this year after completing its first 12 months of operation.
Sai Cheng chief executive Grant Kelly said he was confident of strong growth. “China’s international freight market is growing at 25 per cent a year,” he said. “We should grow faster than that in turnover, although it is off a small base.”
Last year, Sai Cheng — a joint venture between Australia Post and China Post — set up five logistics centres. The company spent 2005 establishing its operations in China.
Mr Kelly said this year the company would build another logistics hub in Tianjin in northern China. “This will be near China’s growing manufacturing base,” he said.
Australia Post set up in China before its logistics rival Toll Holdings put its feet on the ground there.
Another big Australian logistics group, Linfox, has long operated in Asia.
Australia Post already competes against Toll through Australian Air Express, its joint venture with Qantas. Toll chief Paul Little aims to use the Toll-owned Virgin Blue as a competitor in the air freight market.
Sai Cheng, however, does not handle just general mail; it carries a variety of freight, from computers to music, printed matter and clothing.
Mr Kelly is an old China hand and a logistics veteran. He was previously DHL’s Asia-Pacific regional head — DHL is the air express arm of Deutsche Post — and DHL chief in China for more than five years, as well as general manager for TNT in Shanghai.
Mr Kelly said Sai Cheng had a strong emphasis on Australia-China trade, but also aimed at internal freight and China’s import and export market.
“Some Australian customers who export to China will also market goods in other countries. That gives us a spin-off,” he said.
Sai Cheng freights the goods of one Australian company from China direct to the retail shop in Australia. “This is an excellent business model,” he said, which that particular company is now taking to the US and Europe, opening up further potential business for Sai Cheng.
Intra-Asian trade is another looming market. Sai Cheng already fills half the freight on a daily flight between Shanghai and Osaka five times a week.
As a logistics provider and freight forwarder over the whole supply chain, Sai Cheng is a co-ordinator and facilitator.
It does not follow the Toll model of owning much of the infrastructure it uses.
The joint-venture partners complement each other. China Post has existing infrastructure and networks on the ground, while Australia Post has the IT expertise.
Sai Cheng’s current operations include a big logistics warehouse in Shanghai, plus port operations in Shanghai for shipping.
There is also a logistics hub in Pudong Airport for freight distribution, another warehouse in Shenzhen, and port operations in Qingdao.
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