UPS could enter domestic market in China
UPS is exploring the possibility of launching a domestic service in China. The company would need approval from the State Post Bureau, and could submit an application with the body sometime this week, according to the Financial Times.
If permission is granted, UPS could introduce a next-day delivery service, as well as a second and third day service.
UPS could initially deliver up to 5m packages a day in China, according to the FT, with the company already delivering 1.2m parcels a day via its cross-border service – which already equates to $2.1bn in revenue.
The FT quoted Dan Brutto, president of UPS International, as saying: “The opportunities are tremendous.If you take a look at the growing middle class, in the future the domestic market is going to be worth billions.”
The move would be latest UPS initiative to build its presence in the Asian market.
Last month, UPS announced plans to open two health-care-logistics hubs in the continent to tap rising regional demand for medical devices and drugs. A facility of this kind will be opened in China in early 2011, following the launch of a Singapore hub later this year.
UPS also said it expects high double-digit growth in its intra-Asian business over the next ten years.
Earlier this month, rival company TNT said it planned to invest €170m over the next few years to strengthen its presence in the Chinese domestic road delivery market. The investment will enable TNT Hoau, TNT’s road distribution arm in China, to enhance its day-definite road distribution network, introduce new services, and hire additional staff.
For the first half of 2010, sales of TNT Hoau’s day-definite service exceeded those of the entire year of 2009. Service coverage expanded early 2010 to 26 of the biggest cities in China. The day-definite network now covers 800 depots throughout China, with a concentration on the major economic regions, including the Yangtze River Delta, the Pearl River Delta, and the Bohai Bay. The on-time delivery rate is 99%.
