China to become sixth largest express market by 2010

The value of China’s express delivery market was estimated to be $3.5 billion in 2005, with the driving factor behind China’s growth being its increasing export activity with Europe and the US. China is increasingly being seen as the manufacturing center of the world. Post-WTO China is also experiencing rapid market liberalization and modernization as well as rising domestic consumption. Consequently, it has become a strategic market for global businesses.

The overall US express and parcels delivery market is worth $65 billion. It is very mature, dominated primarily by UPS and FedEx, followed by DHL and the US Postal Service (USPS). TNT Express, meanwhile, only has a small presence in the US market. Domestic express and parcel delivery products account for almost 90% of the total US market. Both UPS and the USPS dominate the ground segment as a result of a long-standing ground delivery service network. FedEx and DHL USA mainly concentrate on the air express segment, although the former has expanded its market share in the ground segment over the past few years.

Europe’s express and parcels delivery landscape, meanwhile, reflects the international dominance of the ‘four integrators’ and the gradual expansion of the two largest postal operators in Europe (apart from Deutsche Post and TNT NV), La Poste and Royal Mail, primarily fuelled via acquisitions. As the European market consolidates, the combined market share of the ‘big six’ increases, and this is likely to continue as the major players expand operations in eastern Europe, particularly in the new EU countries. Germany has the largest share of the European express and parcels market, followed by the UK, which has been growing at a faster pace than Germany and France, and has consequently closed the gap with the largest European market. The central and eastern region accounts for a small share of express revenues in Europe but is the fastest growing market within it, poised to experience double-digit rate figures for the next five years.The structures of the respective regional express and parcels markets vary widely, but most European countries share one commonality: the market leader is usually the incumbent national postal operator and its express subsidiary. In the majority of EU countries, the national postal operator is followed by an integrator (usually DHL) as the second biggest player in terms of market share.

Asia-Pacific has fastest growth with a value of $34 billion, Asia-Pacific is the fastest-growth express and parcels delivery region globally and has experienced growth rates of between 15-20% over the past few years. Japan is the largest and most developed express market in Asia-Pacific, which helps to explain why the key domestic Japanese parcel operators – Yamato Transport, Sagawa and Nittsu appear as the top players in the region.

Globally, China is a strategic growth market for the express industry. Among the key reasons for this are the role of China as key country in terms of global supply chains and the significant gross domestic product (GDP) growth maintained in the last four years, which have made China the second EU trading partner after the US. In addition, the country is experiencing a significant expansion of transportation infrastructure. Canada is currently the sixth largest express market in the world. However, China is expected to be the holder of this rank by 2010.

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