Big Four Turn Cautious on China's Domestic Delivery Market
DHL, FedEx, UPS, and TNT have slowed down their expansion in the Chinese domestic delivery market these days due to high costs.
FedEx, the world’s largest express delivery company, is reported to only operate international express delivery business in China for the moment.
US-based FedEx has become the main sponsor of Chinese Badminton Team from 2006 to 2008, when members of the team would wear sports clothes with words “FedEx” when participating in international games.
A principal at the market division of FedEx’s Asia-Pacific region explained that this move was aimed to further enhance its brand recognition among Chinese small and medium customers.
Brussels-based DHL is still handling domestic express delivery business. But it charges more than CNY 100 for a document delivery from Beijing to Shanghai.
At the beginning of 2004, DHL marched into the Chinese market, which was fully opened on December 11, 2005 according to China’s entry into the WTO. The company has been the first foreign express deliverer to enter the country.
It has launch two domestic businesses in China, including 2-30 kg parcel delivery within 24 hours and 30-1,000 kg parcel delivery within 48 hours. It has even set up special divisions for the domestic express in the country.
However, some of them have been cancelled now. Insiders said that it is losing money in China due to low business but high cost.
DHL-Sinotrans, DHL’s Chinese joint venture, has lifted fuel surcharges from 11.5 percent to 13.5 percent as of June 1. It is a move to offset the increasing operational costs resulting form soaring oil prices in the international market since 2005.
UPS, the world’s biggest package delivery company, also announced an increase from 13.5 percent to a record high of 15 percent since June 5. The US titan is only offering domestic delivery services for its contracted customers for the time being.
Last month, it signed a memorandum of understanding with Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) to provide logistics and express services to the games, including making, coordinating and implementing logistics plans
TNT, an express giant with the biggest air and road express delivery infrastructure in Europe, is paying more attention to high-end customers in China and striving to sign long-term contracts with them.
TNT from the Netherlands disclosed that it will restructure TNT China recently after having 50 partners in the country. It has analyzed its domestic business in China over the past year and found the Chinese market is not large or mature, elaborated Ken Mccall, chief executive of TNT China.
China has a population of 1.3 billion and its express business grows at an average speed of 30 percent annually and its current market volume has hit CNY 10 billion, according to China’s industry statistics.
The country is filled with State-owned express operators such as EMS, private express carriers like ZJS Express and overseas operators including UPS, which has huge transportation networks in more than 200 countries and regions and whose daily parcels and mails reaches more than 14 million. Up to 90 percent of domestic privately-owned express operators just do inner- provincial and regional business.
