Deals | Benchmarked against Pilot Flying J, Shenghai Truck Station Builds One-stop Truck Service Centers in China

Shenghai plans to build an additional 50-plus truck stops across China in 2018.

Screenshot from Shenghai.

According to Research on China’s Road Cargo Transport Market, the total business volume of the Chinese road cargo transport sector reached 6,100 billion ton-kilometers, with over 5 million heavy trucks, more than 14 million medium/light trucks, and some 30 million drivers in China have created the world’s largest road transport market valued at more than 5 trillion yuan (around $ 796 billion).

Gas and repair & maintenance (aftermarket) make up the two biggest costs of freight transport by road, accounting for nearly 30% and 15% of the total respectively. This makes the reduction of fuel costs and maintenance expenses an important means of cost control for truck fleets.

Benchmarked against Pilot Flying J, Shenghai Truck Station Builds One-stop Truck Service Centers in China
Image credit to Shenghai.

Founded five years ago, Shenghai Truck Station (盛海-汽车驿站) is an operator of truck stops based in Shanghai. Through the 40-plus truck stops it operates next to expressways and logistics centers across the country, the company provides its logistics clients with services such as refueling, DEF refill, and maintenance & repair, as well as places for drivers to rest. It allegedly generated 300 million yuan (approx. $ 48 million) in operating revenue last year.

In order to meet the various needs of logistics companies and truck drivers, Shenghai has incorporated into its truck service centers the functions of gas stations, rest areas, convenience stores and parking lots, said XU Jianzhong, founder of the company. Besides refueling, and repair & maintenance services, Shenghai also offers free amenities like showers, laundry, and restaurants in the rest areas and expects to include freight bill factoring, lodgings, quick repair services, and other aftermarket services into its service portfolio in the future, with a view to building itself into a full-service truck stop chain.

The company already boasts big-name clients like Deppon, ZTO Express, and JD Group. It plans to build an additional 50-plus truck stops across China in 2018, putting in place a nationwide network consisting of truck stops both along expressways and inside cities.

It will generate revenue by:

  • Selling fuel or distributing fuel with a mark-up.
  • Offering supporting services like DEF, engine oil, tire renting, repair & maintenance, as well as rest facilities for drivers.
  • Using data to probe and identify clients’ potential needs and offering high value-added financial services that cater to such needs, such as factoring and finance leasing.

Shenghai’s operating revenue was only 7.14 million yuan (approx. $ 1.13 million) back in 2015, but it surged 13 times into 110 million yuan (approx. $17.5 million) in 2016, after an injection of 15 million yuan (approx. $2.4 million) investment from G7. The figure rose further by 200% to 310 million yuan (approx. 49.3 million), including 100 million yuan (approx. $ 15.9 million) in GMV, in 2017, although the company did not secure further financing that year. It’s planning a new funding round this year and expects to bring its annual revenue to over 1 billion yuan.

Founder and CEO XU Jianzhong holds a Logistics and Management degree from East China University of Science and Technology and has been engaged in the business of gas stations for trucks since graduation. CAO Baoqin, the man in charge of the development and construction of Shenghai’s truck stops, boasts 15 years of experience in gas station development, construction, and management at China National Petroleum Corporation and China Petroleum & Chemical Corporation (Sinopec). He led the development and construction of five gas stations that were later acquired by Sinopec. At Shenghai, he oversees the operation of all its truck stops and is also responsible for their approval and management.

Writer: Nicholas