UPS goes up against DHL in Chinese market
United Parcel Service is to launch its first package delivery service within China, pitting the US company against German-owned DHL in a battle for the Chinese domestic market.
UPS said it would offer next-day deliveries between 23 Chinese metropolitan areas by September and planned to expand the network in future.
Until now, UPS offered only international shipments in and out of China. DHL, a unit of Deutsche Post, was previously the only foreign company providing domestic package delivery.
The new service represents a widening of UPS’s ambitions in China from its previous focus on imports and exports. “We intend to have the most extensive package delivery and logistics offering to, from and within China,” said David Abney, president of UPS’s international operations.
He said the domestic service would be aimed at Chinese businesses and foreign companies with multiple locations within the country: “It also recognises the longer term potential of a rapidly growing consumer marketplace in China.” UPS also announced yesterday that it would establish a new hub for its Chinese operations at Shanghai’s Pudong International airport by 2007.
Both the domestic delivery service and the Shanghai facility are part of a Dollars 500m investment in China announced by UPS last year. Last December, UPS paid Sinotrans, its Chinese partner, Dollars 100m to take full control of their joint-venture, becoming the first foreign package delivery company to operate in the country without a domestic partner.
This year UPS’s supply chain services division announced it would increase its number of cargo-handling warehouses in China from 40 to 60 within two years. And the company has lifted its number of weekly flights into the country to 18 and plans three more next year.
DHL and FedEx, UPS’s biggest US rival, have also been aggressively expanding in China.
Rapid growth in China has helped UPS offset slowing growth in its core US market.
Export volume out of China more than doubled last year, compared with a 6.6 per cent increase in domestic US volume.
UPS sets China next-day network
JOURNAL OF COMMERCE, Web, Sec. AIR, p WP 07-08-2005
UPS announced its first package delivery service in China, in an operation that will initially link 23 major metropolitan areas with next-day service. The service will be launched in September. It will not have a material impact on financial performance in 2005, UPS said in a statement. DHL, a unit of Germany’s Deutsche Post, recently launched a direct overnight express service between Beijing and Hong Kong, and has plans to add other destinations soon.
