Thursday, October 27, 2016 marked the first day of trading on the New York Stock Exchange (NYSE) for ZTO Express, a Chinese delivery firm that was founded 14 years ago. It raised $1.4 billion from its listing as an IPO, the largest on Wall Street this year. ZTO is expecting significant growth potential of home deliveries in China and claims higher profit margins than FedEx or UPS. Alibaba is its main customer, accounting for 70% of ZTO’s business.

Jean-Paul Rodrigue, MetroFreight distinguished researcher and professor in the Department of Global Studies and Geography at Hofstra University in New York, was interviewed as a shipping expert. He stated that investing in ZTO is not a sure thing and pointed out three potential risks:

• Growth prospects of China are less than we think;
• Consolidations and mergers of competitors take place considering the IPO;
• Alibaba could change its strategy and starts to restructure its distributors or go its own way.

Professor Rodrigue concluded however that at the moment there seem to be more reasons to buy into ZTO Express than not. The firm has plans to use its expanded financial resources to purchase land, facilities and more trucks to grow its business.