Chinese State Rail Operator Forms Cargo Venture With SF Holding

(Bloomberg) -- China Railway Corp. formed a cargo venture with express delivery company SF Holding Co. as part of the nation’s efforts to draw in private enterprises to bolster state firms’ competitiveness.

Cargo subsidiary China Railway Express Co. will hold a 55 percent stake, while SF, the country’s biggest parcel-delivery company, will own the rest of the venture, the national railway operator said in a statement Wednesday. SF and China Railway won’t own shares in each other.

The pact with SF is part of China’s efforts to let railways account for a larger share of cargo transportation to combat road-traffic pollution, and would help the rail operator meet a goal of increasing cargo shipments by 30 percent by 2020. It is China Railway’s second tieup with a private firm following the sale of a stake in a unit offering wi-fi on bullet trains to Tencent Holdings Ltd. and Geely Automobile Holdings Ltd. in June.

SF and China Railway’s venture, based in the southern city of Shenzhen, will offer cargo shipments by bullet and express trains.

China Railway, which operates the country’s 127,000-kilometer (79,000 miles) network, including 25,000 kilometers of high-speed rail, also plans to sell as much as 10 billion yuan ($1.5 billion) of properties and a stake in a railway operator in Hainan province this year.

As part of efforts to boost state companies’ competitiveness, China also has urged other transportation and logistics firms including airlines to carry out mixed-ownership reform, meaning the sale of stakes in group-related companies to private firms.

China Eastern Air Holding Co., owner of the country’s second-largest airline, agreed to sell 45 percent of its cargo and logistics unit to four private companies as part of the diversification last year, and American Airlines Group Inc. agreed to buy a minority stake in China Southern Airlines Co.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net

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