Archive for the 'FedEx' Category

A contradiction in terms but China’s fast developing express service industry may slow down in 2008. The fault will lie wih the US economy which is suffering from the sub-prime, dodgy loans which have been such a feature of its financial field.

Logistics Association China puts forward a scenario where foreign majors represented by DHL and Federal Express will tap the chance of Beijing 2008 Olympic Games to reinforce their leading positions in the Chinese market, while domestic players, especially private ones, which feature smaller business volume, weaker capital strength and poorer management, will start to have a rough time.

China’s express service industry has been growing at a pace of around 30% in recent years and become one of the fastest growing markets of the world.

True, but DHL China, which should know, states signs of a slowdown actually appeared in 2007 this despite the fact the Chinese market still maintained steady growth.

Another major foreign player, Federal Express China, is more optimistic, working on the the basis the Chinese economy to a degree can be independent from world market changes, It is certain that domestic express service market will continue stable growth momentum although the view of domestic analysts is that with the market base getting increasingly bigger, the growth of domestic express service industry will get slower as compared to years ago.
Source: CargoNews Asia

The New Baiyun International Airport in Guangzhou expects to triple tonnage from last year’s figure within three years. This, after the completion of a new cargo terminal, a new runway and express operator FedEx’s Asia-Pacific cargo center.

New Baiyun handled 653,000 tonnes of cargo and post parcels last year, a rise of only 8.6% over 2005, a relatively low figure compared with other China airports.

But overseas-bound cargo traffic has been rising by an average 50% annually since the opening of the new airport in August 2004.

Liu Zijing,general manager of the Guangdong Airport Management Corporation (GAMC). Said, ‘The new airport has been developing well and fast over the past three years and should become a hub for international flights by 2010.’

Liu Zijing believes New Baiyun willl handle two million tonnes of cargo by 2010, three times last year’s figure, and four million tonnes by 2020.

The new cargo terminal, with an annual handling capacity of 500,000 tonnes, will be completed next year; construction of a third runway and a new passenger terminal will start in 2008; and FedEx’s cargo hub will be completed in the latter half of 2008.

The new airport is also setting up feeder cargo stations, a logistics park and a new administrative center, and opening more international routes, streamlining Customs services and holding talks on the building of a network of network of expressways for speedier cargo flow from other provinces in the Pearl River Delta.

The amazing illustration comes from the SOVINFORMSPUTNIK via the PLA.
Source: CargoNews Asia

FedEx, the US-based logistics giant, plans to start operation of its Asia-Pacific delivery centre it is currently building within Guangzhou’s Baiyun Airport, shown from the air in our illustration, by the end of 2008.

This delivery centre project has a total investment of US$337 million and is expected to become a super large delivery center catering toover 30 Asia-Pacific countries.

The project is expected to add about one million tonne per year of cargo turnover for the Baiyun airport within the first year of operation.
FedEx predicts that this delivery center will handle US$11 billion in revenue by 2010 and $65 billion by 2020.

Construction of the project started in early 2006.
Source: CargoNews Asia

Excerpts from speeches given by logistics industry executives at the recent Council of Supply Chain Management Professionals conference in Tianjin.

Supply chain service providers have great potential for profits if China’s fulfils its ambition to cut logistics costs.
China’s logistics costs totaled $498 billion in 2006 or 18.3% of GDP compared with 9.9% in the United States.
The mainland’s logistics industry still lags two or three decades behind advanced nations.
Domestic logistics companies are small in scale, scattered in several regions and have a low-level of operation and management.
The satisfaction rate of services on a basis of five points is 3.96 for overseas-funded logistic providers, 3.72 for private domestic providers, and 3.61 for state-owned providers.

Alan Turley, vice-president of international affairs for FedEx, Asia Pacific division, said there were poor connections between rail, road and port facilities and a lack of coordination between air, rail and communications authorities. The government, although keen to promote the industry, is hampered by a multiple-layered administration, which only adds to logistics costs.

Fan Gang, director of China’s National Economic Research Institute, said, ‘As China’s urbanization spreads from the coastal provinces to inland rural towns, opportunities will abound for state-of-the-art logistic services in the future as 900 million Chinese live in the countryside and most of the consumption has come from the urbanization process over the years.’
Source: CargoNews Asia

Express delivery means you send something somewhere and it gets there very quickly. In parts of Asia that is quite a novel idea. In China the express delivery market is going through a major revolution.

There are four major foreign players who are used to fighting it out for market share elsewhere in the world plus China Post plus some private local firms and State-owned companies. All are busy working out strategies for success or even survival.

Fedex spent $400 million to acquire the remaining stake of its joint venture with the Chinese firm DTW Group. It also bought all of DTW’s assets in the domestic and international express delivery markets. DTW’s domestic express delivery business had losses of RMB60 million in the first 11 months of 2004, but Fedex still spent $400 million for DTW. Fedex wants the network.
UPS broke from its local partner — Sinotrans — and is going it alone and has the rights to international express delivery business in tier-one cities.
DHL announced its entry into the domestic express delivery market in 2004.
TNT has already begun domestic parcel delivery.
China Post, which is state-owned, is trying to fang market share — possibly through a favorable postal law although this will bring up cries of foul play from foreign and local private firms.
Sinotrans, another domestic delivery giant, seems to be considering whether it should exit the business, or up investment. Zhang Jianwei, Sinotrans’ president, used to say his company would continue to strengthen its position in the domestic market. Whether that still holds true is open for debate. The firm’s air delivery arm, Sinotrans Air Transportation Development, still holds 25% of the international express delivery market.

It will be a major tussle and only the rich and good will survive. But there is little doubt the battle is well worth fighting for the prizes are great.
Source: China Daily

FedEx Express will offer guaranteed next-day deliveries within China for the first time beginning May 28. FedEx said the new domestic offering will connect businesses within China and around the world. FedEx connects more than 90% of China’s GDP to the rest of the world through its global network.

The new domestic services — expected to be fully operational in June 2007 — will offer next-business-day, time-definite overnight delivery service to 19 of China’s biggest cities and a day-definite service to more than 200 cities throughout the country.

Real-time package status tracking will let customers know where their shipments are along the way.

The domestic express network includes a system centered at the Hangzhou Xiaoshan International Airport in the Zhejiang province of eastern China. The newly established hub will initially sort up to 9,000 packages an hour.

A domestic carrier, Okay Airways, will provide the domestic air transportation. Using three Boeing 737 freighters, Okay Airways will operate an air cargo network within China in support of FedEx. The aircraft will operate two circular routes nightly, covering the country’s major airports.
Source: DM News

Air freight between the United States and China is forecast to grow at an average of 9.6% a year over the next 20 years (while traffic to Europe is predicted to grow almost as quickly at 9.3% over the same period).

Charles Kaufman, vice president and head of air freight, Asia-Pacific, for DHL’s Danzas Air & Ocean division, said, ‘The output from the two major airports of Shanghai and Beijing into the United States and Europe is tremendous. Airlines are increasing their flights out of China rapidly.’

The General Administration of Civil Aviation of China recently granted foreign carriers the right to pick up cargo on the Chinese mainland en route to other destinations.

Previously, an aircraft picking up freight in Shanghai, for example, was required to fly directly to its end destination without making stops in between. This new ‘freedom’ — the same sort of ‘freedoms’ are applied to passenger traffic — means that there is room for futher development in the aircargo market between China and the United States.

UPS, FedEx Express, DHL Express and even the U.S. Postal Service are making big investments in hopes of capturing market share in the China region.

John Wheeler, a representative of UPS International, said, ‘We see nothing but growth coming from China and going into China, too. The biggest issue right now is that there is a lack of capacity in and out of China and everybody is feeling the pinch. The result is a series of investments:

UPS announced in August that it will add eight new Boeing 747-400 freighters to its fleet, starting in June of this year.

FedEx announced this summer it is building a new Asia Pacific hub at the Guangzhou Baiyun International Airport in southern China. The facility, which represents a US$150 million capital investment, will allow FedEx to double its capacity in China by sorting up to 24,000 packages per hour.

DHL is investing US$273 million in a five-year China expansion plan that calls for the company to develop and launch China Domestic, a door-to-door express delivery service in China; establish Express Logistics Centers in Shanghai, Guangzhou and Beijing; and establish 16 spare-parts centers across China.
DHL will spend US$12 million to double DHL Danzas Air & Ocean’s presence from 20 cities to 37 by 2007, and will invest US$3 million in two DHL Danzas Air & Ocean Logistics Centers in the Shanghai/Pudong region.

Source: DC Velocity

The private carrier Okay Airways plans to carry serious amount of freight and intends to build a domestic network with Hangzhou as its hub.

China’ first private carrier (the example shown above is most certainly not the finished livery) which is currently based in Tianjin is looking at FedEx Express and other potential partners to cooperate on express mail and cargo services.

Liu Jieyin, president of Okay, said, ‘Okay is planning to build its domestic freight service network in the coming years. Freight will be flown first to Hangzhou before being carried to other destinations using larger aircraft. It saves us operational costs.’

Okay’s first freight flight from Guangzhou to Hangzhou was launched earlier this month. The carrier, which now operates three Boeing 737-300 freighters, plans to start Hangzhou-to-Beijing cargo flights in April. Liu Jieyin said, ‘We will open more flights according to the demand from our business partners.’

He hoped that talks with FedEx Express and other potential business partners which are currently under way should bring results before the end of March. Earlier media reports said Okay will probably become the partner of FedEx Express’s domestic express business but Fedex said that it is premature to discuss any operational arrangement that the company may have with Okay Airways or any other airline.
Source: China Daily

Over the next few years the German air express and logistics giant DHL will invest more than $110 million in China. The investment will be used to expand infrastructure, including more transport vehicles and service center equipment, and for training its employees.

Klaus Zumwinkel, board chairman of Deutsche Post World Net, which is DHL’s parent company, announced all of this during his latest North Asian trip.
DHL is considering setting up a North Asia hub in either Shanghai Pudong International Airport or Incheon International Airport in South Korea.

Scott Price, CEO of DHL Express Asia-Pacific, said an announcement on which airport is selected will be made by the second quarter of this year. He said, ‘There is still one last filter of analysis to do. It is a very close race between the two airports.’ DHL currently has a Central Asia hub in Hong Kong and South Asia hub in Singapore.

The company’s United States rivals, FedEx and UPS, both have plans to build regional hubs in China. FedEx, previously based mainly in the Philippines, will launch a new Asia-Pacific hub in Guangzhou Baiyun International Airport in 2008.

UPS signed a memorandum of understanding with Shanghai Airport Group last year to establish the UPS International Air Hub at the Pudong airport.

China is one of DHL’s fastest-growing markets, accounting for 25% of its revenue in the Asia-Pacific and 10% of its global sales.
Source: China Daily

As logistics increases in importance in China so it becomes more and more a game for the big players. As a result small logistics operators are being squeezed by expansion-minded multinationals. When an industry is predicted to grow by 15 to 20 percent a year until after 2010 it will attract the major players.

Consolidation has been in full swing since China opened up its logistics sector on December 11 last year under World Trade Organisation agreements. Now multinationals have seized the opportunity to enter the market. They and the big Chinese domestic firms are taking over small mainland companies in a contest for the major prizes.

Cai Jin, director of the China Logistics Information Centre said that in the coming years, ‘there will definitely be fewer but stronger players in the logistics market. Many will have to pull down their shutters or merge with rivals.’

According to the Chinese Federation of Logistics and Purchasing there are now more than 700,000 logistics enterprises registered on the mainland, mostly small and medium-sized operators. Most of them lack strategic planning, trained personnel and systematic management.

Since the opening of the logistics market:

Schenker has set up a logistics centre near Beijing’s airport.

STX Panocean of Korea launched a joint venture in Qingdao.

US multimode operator Burlington Northern Santa Fe Corporation set up an office in Shanghai.

Prologis and Wurth plan to expand their logistics park in Shanghai.

Container service provider Scoular settled down in Guangdong.

FedEx, which entered into a 50-50 joint venture with Datian in 1999 after leaving another partner, paid the company $400 million to purchase the other 50 percent early this year.

TNT offered $135 million for 100 percent control of Huayu Logistics, the biggest truck operator on the mainland, based in Heilongjiang Province.

Earlier, UPS agreed to pay $100 million to break free from a joint venture with Sinotrans.

A source at the Chinese Federation of Logistics and Purchasing said if Chinese operators specialise in specific areas in which they hold the upper hand they could get stronger, despite the flood of foreign capital.
Source: Cargo News Asia