FedEx, UPS, DHL train eager eye on China
DHL, UPS, FedEx train eager eye on China
Reuters
Published on: 10/14/05
Shipping rivals DHL Express, FedEx and UPS are vying to expand in China's express delivery market as rocketing global trade with the Asian country drives demand for freight and logistics services.
DHL expects China to account for as much as three-quarters of Asia-Pacific revenue in five years, up from more than 45 percent now, a senior executive said Thursday.
Asked about China's contribution to Asian revenue, Jerry Hsu, DHL's president for Greater China and Korea, told Reuters: "Hopefully, we will [have] at least 70 to 75 percent five years down the road. We have over 45 percent currently."
DHL expects revenue there to grow by more than half this year on top of 50 to 60 percent growth last year, a growth forecast given earlier this year that Scott Price, the firm's Asia-Pacific chief executive, reiterated on Thursday.
"If GDP grows 8 to 9 percent, international express is going 30 to 40 percent, and we always aim to equal or grow faster than the market," Price said in an interview.
DHL posted 3.4 billion euros ($4.1 billion) of revenue in Asia in 2004, vs. over 24 billion euros worldwide, according to the latest figures provided in materials on Thursday.
DHL controls 40 percent of the international express market in China — a $1.5 billion market that industry executives expect to become the world's largest cargo market some day — while FedEx has somewhere between 12 to 20 percent and UPS has about 10 percent, analysts said in July.
The Asian transportation market is projected to grow from $700 billion today to over $1.3 trillion by 2020, with most of the growth coming from Northeast Asia, DHL said in a statement Thursday.
In China, the air express market is expected to continue to grow at 30 to 35 percent — three times the global average of 11.2 percent, it said.
To stay ahead of rivals, DHL will continue to expand facilities and staff, Price said. The German firm has spent $273 million in China in the past two to three years, he added.
Earlier this month, DHL said it would more than double investment in its Asian express air cargo hub facility in Hong Kong to $210 million to meet growth in Asia and, in particular, China.
It will use $110 million to upgrade and double the size of its existing facility at Hong Kong International Airport to 377,000 square feet by 2007.
Its rivals have also been active.
FedEx will move its Asia-Pacific hub to China from the Philippines by building a $150 million hub in Guangzhou Baiyun airport, while UPS plans to build a hub in Shanghai by 2007.