DHL, FedEx, UPS set to do battle in Chinese logistics market

FedEx is working out an agreement with Shanghai's Pudong International Airport to build a transit center
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China's express delivery sector is expected to enter an era of intense competition with international logistics giant DHL announcing a plan to expand its operations in Shanghai.

When DHL's North Asia transit center began operations on July 12 in Shanghai, Li Derun, the head of the Shanghai Airport Authority, told Guangzhou's 21st Century Economic Report that FedEx was expected to sign an agreement with Shanghai Pudong International Airport to build a continental transit hub in August this year at the earliest.

With the international transit center established at Pudong Airport by UPS several years ago, the competition between the three international delivery firms is expected to become intense in Shanghai.

Each is attempting to outdo its rivals in the size of their transit center.

Frank Appel, CEO of Deutsche Post DHL, said he did not think FedEx and UPS would pose a threat to DHL when it applied for licenses. He said the two competitors would only receive licenses for regional operations but not for national operations.

Ma Junsheng, director-general of China's State Post Bureau, also denied that the bureau had distributed domestic licenses to FedEx and UPS.

While UPS, FedEx and DHL selected Guangzhou, Shenzhen and Hong Kong, respectively, as the location of their Asia-Pacific headquarters, DHL began many high-profile projects after its North Asia transit center opened for business.

Appel told the newspaper that DHL will soon open its logistics center in Hong Kong, while a new operation center affiliated with its global logistics hub would open in the Asia-Pacific. In addition, DHL plans to optimize its air transport facilities in Shanghai.

This is first time DHL has taken such concerted steps since it entered China 20 years ago. DHL China CEO Lin Jinglun also announced expansion plans subsequently, saying the company would invest US$132 million to buy eight airplanes to ply the routes between Shanghai and North Asia, Europe and the United States.
In addition, DHL plans to increase its deliveries in North Asia, China and Taiwan.

Appel said DHL's operations in China were currently worth €4.2 billion (US$5.15 billion). Its turnover was equal to the combined turnover of UPS, FedEx and TNT, he said.

Wang Lei, an industry expert, said the three delivery firms' increased investment in China and the fierce competition between them would open the domestic market and link it to the international market.