Core Viewpoint - UPS has terminated its plans to acquire Estafeta due to unmet closing conditions, reaffirming its commitment to growth in Mexico and reliable service for customers [1][2]. Group 1: Acquisition Details - The acquisition of Estafeta was announced in July 2024, with expectations to close by the end of the year [2]. - CEO Carol Tomé indicated that the acquisition process was delayed due to regulatory and pre-closing conditions [2]. Group 2: Strategic Importance - The deal was intended to leverage Mexico's increasing role in cross-border trade, particularly as manufacturers shift from China to the U.S. to mitigate geopolitical and tariff risks [3]. - UPS has conducted over 600 supply chain mapping assessments in 2024 to assist customers in evaluating reshoring options [3]. Group 3: Estafeta's Services - Estafeta offers a range of services including truckload, less-than-truckload, freight forwarding, distribution, customs brokerage, and express parcel delivery [4]. - The combination of UPS and Estafeta was expected to enhance service offerings for customers in Mexico, particularly in small package, healthcare logistics, and contract logistics [4].

Summary of Key Points from the Conference Call Industry Overview - The logistics industry in China is experiencing a positive shift in average selling price (ASP) trends due to successful anti-involution efforts, with express revenue rising 9% year-over-year (Y/Y) in July [2][10] - The Chinese government has been actively addressing over-competition since July 2025 through the implementation of the Price Law and the use of big data for regulatory enforcement [2][10] - Local initiatives in regions such as Guangdong, Zhejiang, and Beijing are focusing on service quality and parcel pricing, which is enhancing regulation and benefiting the logistics industry [2][10] Company-Specific Insights - **JD Logistics (JDL)**: - Plays a crucial role in supporting JD's food delivery execution, managing a full-time rider workforce with proper contracts and benefits [3][10] - Inclusion in the Hang Seng Index (HSI) is expected to improve liquidity and visibility, boosting investor confidence [3][10] - **SF Express**: - Emerged as the key winner in the logistics sector, gaining the largest market share with a parcel volume growth of 34% Y/Y, significantly outpacing the industry average of 15% Y/Y [12][14] - Express parcel revenue for July increased 15% Y/Y, reaching RMB 18.7 billion, with an ASP of RMB 13.55, reflecting a 14% Y/Y decline [12][14] - **ZTO Express**: - Emphasized rational pricing and anti-involution strategies, focusing on service quality and profitability rather than aggressive price wars [13][10] - **Full Truck Alliance (YMM)**: - Reported strong 2Q25 performance but faces challenges with a reduced FY25 outlook due to regulatory changes [3][10] Market Dynamics - July's parcel volume maintained a robust trend, with a 15% Y/Y increase, reaching 16.4 billion parcels [10][12] - The inter-city parcel volume accounted for 90% of total parcel volume, with a 16% Y/Y increase, while intra-city volume grew 8% Y/Y [10][12] - The ASP decline narrowed to 5% Y/Y in July from 6% in June, indicating easing competitive pressures [10][12] Regulatory Environment - The anti-involution campaign is broadening, with regulators intensifying efforts to rationalize the competitive landscape [9][10] - National bodies like the State Post Bureau and the National Development and Reform Commission have issued pricing guidance to stabilize the industry [11][10] Investment Ratings - J.P. Morgan maintains an Overweight rating on SF, JDL, and ZTO, while keeping a Neutral rating on YMM, reflecting a balanced risk/reward scenario [3][10] Additional Insights - Online retail sales in July showed a strong start for 3Q25, with home appliances sales growing 29% Y/Y, while food sales softened [15][17] - YMM's revenue growth in 2Q25 was 17%, but the company revised its FY25 revenue guidance down by 5% due to challenges in the freight brokerage segment [16][18] This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the logistics industry in China, company-specific performances, regulatory impacts, and investment outlooks.