Excerpt from: China Supply Chain and Logistics Strategy
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| January 17, 2008 | | UPS, FedEx, and DHL are investing heavily to compete for its reputation and market share in China. Are you selecting the right carrier? | The three major small parcel carriers, UPS, FedEx and DHL, dominate about two-thirds of the market share. DHL has the longest history in Asia and dominates up to 38% of the market share. It is also considering expanding its network through a domestic air-cargo venture with a local carrier. With the fast growing intra-Asia trade, UPS reported a 20% growth in the third quarter of 2007. The three major carriers are investing in new hubs to increase capacity. DHL and UPS are both building new hubs at the Shanghai Pudong International Airport. DHL’s North Asia Hub will be its sixth hub in Asia. Meanwhile, FedEx already has a $150 million hub in southern city of Guangzhou which will begin operation in December 2008. The remaining market is shared by local and regional carriers providing short shipments to factories and businesses. The director of transportation and trade compliance for Arrow Electronics, an electronic distributor that uses many small parcel inbound shipments from suppliers in Asia to its regional distribution centers, Leif Holm-Anderson commented “many of the local Asia carriers are actually trucking companies functioning as a courier for our boxes from one location to another, not really small parcel delivery specialist.”
Coverage, rate structures and service levels are the major factors when selecting a carrier. DHL, UPS, and FedEx drive a much bigger engine than a local delivery firm providing companies more reliable and visible shipments, which is crucial in developing markets such as China.
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