In line with the continuing heavy investment in China and S.E. Asia, two of the leading global express players appear to be making major additions to their infrastructure in the region.

Last week DHL announced that it was to develop an air cargo hub at Shanghai (Pudong) International Airport, specifically for its express parcel operations. This is part of its joint-venture with Sinotrans, which is based out of Shanghai but covers the whole of China. The DHL ?Sinotrans Express parcels business is the largest in China with an estimated 40% of the market. In addition to the air cargo hub, the DHL-Sinotrans Express parcels business is building a corporate HQ in Shanghai and expanding its branch network to 72 offices throughout China.

DHL, already has an air cargo ’super-hub’ at Hong Kong International Airport, backed-up with a strong presence at Singapore. DHL states that the reason for the expansion in Shanghai is to provide more capacity in China “to ensure it can manage the expected volume and capacity, also to provide DHL with more flexibility, as well as network stability.”

The situation in Shanghai is further complicated by the presence in the city of DHL’s other joint venture, ZF Danzas, which is one of China’s largest freight forwarders and logistics service providers. It is presumed that the express and logistics joint ventures will operate separately, despite the obvious synergies in the long-term.

Rumours have also emerged that UPS is considering expanding its presence in the Philippines. Local press reports suggest that UPS will expand its Clark facility enabling it to improve its service to the Asia Pacific region and China. These developments have not been clarified or confirmed with UPS, but if true would present a contrast with FedEx which moved its hub operations for the region from Subic Bay to Guangzhou in Southern China earlier this year. UPS has already announced the development of an express parcels hub facility at Shanghai.

Whilst China is a fragmented market, with major differences between the Pearl River Delta, Shanghai and Beijing, the fact that companies such as DHL and UPS are investing in more than one hub in the region illustrates the size of their growth expectations. If expansion continues at this pace the China air-hub infrastructure of the two companies could shortly be larger than DHL has in the US or UPS has in Europe.

Source: Transport Intelligence

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