SF Express has just kicked off cooperation with the Dutch post office, launching business-to-customer delivery service for consumers in Europe buying through Chinese e-commerce platforms. This is similar to the cooperation between ZTO Express, another mainland courier firm, and the French post office.

After the parcels reached Europe, the Chinese courier firms rely on the European post offices to send the parcels to cut costs.

Li said SF Express would also be interested in expanding its business-to-business service to Europe, which would require a higher level of service.

He said SF Express derived less than 10 per cent of its income from cooperation with Alibaba and 70 to 80 per cent from business-to-business courier service, such as the delivery of order samples on the mainland.

"Air cargo shipments of SF are reaching one million tonnes this year, accounting for 21 per cent of China's market share," Li said. "There are about 100 cargo aircraft in China and SF runs 36 of them."

He said SF owned 16 cargo planes and fully chartered the other 20.

Li said SF Express recently signed a contract with Boeing to buy five 767 passenger-to-freighter conversions, with the first aircraft to be delivered next year before peak season. The planes would be used for domestic flights although they were capable of long-haul flights.

He said he expected SF's air cargo shipments would exceed two million tonnes in 2018 and the number of cargo aircraft in the company's fleet would grow to 100 by then, including both owned and chartered.

The company's revenue would grow 40 per cent this year, Li said.

SF still had to use other carriers' cargo space for most of its overseas services, except Hong Kong and Taiwan, as the amount of shipments was not big enough for it to fully charter a flight.

SF has been expanding to other parts of the supply chain in China, including cold chain and supply chain finance, to provide funding for small and medium-sized enterprises.

The private express delivery firm attracted investment from state-owned capital last year when it sold a 25 per cent stake to a consortium including Citic Capital, Oriza Holdings and China Merchants Group. Li said the company had no plans to go public at the moment.

Hong Kong faces logistics hurdle in cross-border e-commerce push

Hong Kong should embrace the fast-growing, multitrillion-yuan cross-border e-commerce market, but its shortage of warehousing and logistics facilities could be a hurdle, mainland players said yesterday.

"As a free port and a logistics centre, Hong Kong can be a perfect hub for the consolidation and deconsolidation of personal parcels shipped from overseas to mainland domestic consumers, including itself in the e-commerce supply chain," SF Express vice-president Li Dongqi told the Asian Logistics and Maritime Conference.

Li's view was echoed by Harvey Wang, the vice-president of operation at Yihaodian, the mainland's first online supermarket, which is 51 per cent owned by Wal-Mart.

Wang said his company was looking to set up a storage and distribution base in Hong Kong, where popular consumer products could be imported and stored in warehouses before being sold to online shoppers on the mainland.

Cross-border e-commerce sales were expected to reach 4 trillion yuan (HK$5 trillion) this year, accounting for 14.5 per cent of the mainland's total imports and exports, said SF Express.

The ratio would grow to almost 20 per cent in 2016.

But a shortage of warehousing and logistics facilities in Hong Kong and sky-high rentals also see Yihaodian study different locations, including free-trade zones and bonded logistics parks in Shanghai and Guangdong.

"Hong Kong has many advantages that bonded zones on the mainland cannot compete with," Wang said. "But if we can't find the space here, we may have to go somewhere else."