Shanghai-based ZTO Express plans to launch a joint venture (JV) with Turkish Airlines and Hong Kong-based PAL Air to explore the international express delivery market.

The business scope of the new JV, which will be based in Hong Kong, will include all door-to-door logistics activities—including trucking, collection & distribution, freight transportation, cross docking and final mile delivery. It will also include warehouse management, order and supply chain management when necessary.

E-commerce company Alibaba Group is also potentially involved in the JV, and expects to close a deal this month to buy 10% of ZTO Express with an investment of $1.38 billion.

ZTO Express handles 28 million parcels a day.

“In 2017, ZTO’s annual parcel volume reached 6.22 billion parcels,” ZTO Express chairman Mei Song LAI said at the signing ceremony in Istanbul. “As the largest express delivery company in the world, ZTO is an open platform built on core values of ‘co-create and share.’ Because of the innovation and globalization of new retail and e-commerce, China’s logistics industry [has] tremendous new growth opportunities. ZTO will continue to solidify and strengthen its competitive advantage for domestic growth, and will actively explore and expand international markets, building cross-border business as an important growth engine for the future.”

Turkish Airlines chairman of the board and the executive committee Mehmet İlker Aycı said the JV is expected to generate over $2 billion of revenue in five years. “The growth is expected to gradually continue to parallel e-commerce demand,” he said.

He added the Istanbul New Airport will be open by Oct. 29 this year and it will function as Turkish Airlines’ main operating hub, which will gradually provide Turkish Cargo up to 4 million tons of cargo handling capacity.

Industry analysts point out China is the fastest-growing express delivery market in the world. With the rapid growth of the cross-border e-commerce, international express delivery can generate much higher profit than domestic delivery, which is attractive for domestic express delivery companies like ZTO Express.

PAL Air vice chairman Vivian Lau predicted the global express/courier industry revenue will reach $340 billion in 2020 and to more than $400 billion in 2023.

PAL Air Ltd. is a member of Pacific Air Holdings Ltd. that is engaged as a general sales and services agent (GSSA), neutral wholesales (cargo and express) and project consulting services.