FedEx to expand Kinko’s in Asia, posts China boom
FedEx Corp. (FDX.N: Quote, Profile, Research) , the world’s top air express shipper, is posting explosive growth in China and now plans to expand its Kinko’s copy-chain across Asia, a senior executive said on Wednesday.
FedEx, which vies with Deutsche Post’s (DPWGn.DE: Quote, Profile, Research) DHL Express [DHL.UL] and United Parcel Service Inc (UPS.N: Quote, Profile, Research) in the global courier arena, is trying to muscle in on an insular sector that it says could one day be the world’s top cargo market.
Analysts estimate it could be worth $1.5 billion annually.
FedEx’s delivery volumes in China grew 52 percent in the quarter ended Aug. 31, said David Cunningham, FedEx’s Asia Pacific president. He did not elaborate.
The U.S. firm does not divulge sales by country or region.
Now FedEx also wants to pump up the number of Kinko’s outlets in Asia — the business services company it bought for $2.4 billion in February — to incorporate it into its global courier network and bring in more customers.
Just over a 100 of Kinko’s 1,200 stores are found outside the United States. It runs outlets in South Korea, Japan, Australia and two in China, with a third to open soon.
“China is the fastest growing and most important market in our network,” Cunningham told reporters in Shanghai before opening its new headquarters in China.
“We plan to dramatically expand Kinko’s capacity across Asia and we plan to integrate that” within the network.
Rocketing trade, which surpassed $850 billion last year, is driving Chinese demand for air freight, though the market is now dominated by local monopoly China Post and domestic freight forwarders such as Sinotrans Ltd. (0598.HK: Quote, Profile, Research) .
Cunningham said FedEx was keeping a close eye on proposed Chinese legislation, which industry insiders say will impose a tax on foreign courier firms to help fund a rural postal service.
Such a tax would deal a fresh blow to overseas companies battling for a bigger slice of a market jealously guarded by state-run China Post, the industry’s operator and regulator.
“We have made our position very clear,” the towering executive said. “We believe the playing field ought to be level.”
But alleged protectionism has not stopped FedEx’s expansion into the world’s seventh-largest economy.
FedEx, whose purple-hued trucks and planes deliver everything from mortgage applications to flammable gases around the world, last month won approval from the U.S. government to add 12 new weekly flights to China, bringing the number to 23.
The Memphis, Tennessee-based company is asking for another six flights in 2006 to bring Guangzhou — which opened a huge new airport earlier this year — into its network.
Cunningham said China would be one of the first destinations for its giant new Airbus (EAD.PA: Quote, Profile, Research) (EAD.DE: Quote, Profile, Research) A380 freighters, which will start being delivered in 2008 — the same year Beijing hosts the Olympic Games.
