SF Holding Co Ltd and Deutsche Post DHL Group launched a co-branded business SF DHL Supply Chain China in Shanghai on Monday, marking SF Holding's entry into the much larger supply chain market, said its chairman.

The aim of the co-branded company is to allow the two companies to reshape the supply chain market landscape of the Chinese mainland, Hong Kong and Macao.

"Today is a milestone for SF Holding, because it shows that the firm has officially and comprehensively entered the supply chain sector," said Wang Wei, chairman of SF Holding.

"We all know the Chinese courier industry is huge, but the supply chain to business is even bigger. I think SF Holding is expanding from the courier market to a trillion yuan market with our partner," Wang said.

Chinese express service companies delivered 50.7 billion packages last year, 26.6 percent more than the previous year, and their revenue rose 21.8 percent year-on-year to reach 603.8 billion yuan ($89.8 billion), according to data from State Post Bureau.

However, analysts suggest the courier delivery service, though still growing at a rapid rate, is approaching saturation.

In response, major Chinese express service providers have tried to explore new areas by adopting new technologies.

"SF Holding has in recent years diversified its business from purely courier delivery into a variety of areas that are more business-oriented and international," Essence Securities said in a report.

The collaboration with the world's largest supply chain service provider will facilitate SF Holding's transition into China's supply chain sector, said Qu Yongzhong, an industrial analyst with Northeast Securities.

Courier delivery services only account for a small fraction of the logistics sector. Essence Securities projected China's third-party logistics market will reach 4 trillion yuan in the near future.

"I think China's supply chain market is huge, and it is in its early development," Wang said.

"Our strategic partnership with SF Holding enables DPDHL Group to continue to grow in China's rapidly soaring supply chain market through the new co-branded company. In the meantime, DPDHL Group will provide it with all necessary support so that it will become a world-class supply chain service provider in China," said Dietrich Franz, CFO of DHL Supply Chain.

On Feb 18, DPDHL Group and SF Holding concluded the supply chain deal, which saw DPDHL Group and SF Holding enter a 10-year strategic partnership to grow supply chain operations in China.