Leighton's+Page

This page is for Leighton's references and contributions.

· The national economic growth rate is about 10% a year, express cargo volume is growing at 30% in China. While FedEx chose the strategy of a local partnership, UPS chose to enter the market alone. In 2005 UPS bought out the remaining shares of gained ownership of Sinotrans. This gave UPS 89 operating facilities in 45 different locations, covering over 330 cities throughout China. There are challenges though: o Foreign airlines cannot run domestic routes o EMS, the local parcel delivery service, is less expensive than the entering international companies (FedEx, UPS, DHL, etc.) o Brand recognition is low on the mainland, this goes back to Chinese culture of keeping with tradition (including traditional companies) à  UPS was able to overcome this with their participation in the Olympic Games (Charlotte - Business) · Both FedEx and UPS making changes to counter rising fuel costs, “UPS and FedEx have decided it’s ‘time to get unconventional,’ says John J. Coyle, professor emeritus at the Center for Supply Chain Research at Pennsylvania State University.” (Boyle) · FedEx: stocks have dropped 23% over the last year with an expected 40% decrease in first quarter earnings per share; FedEx has created a new software that is expected to decrease the time it takes its’ larger planes to take-off and land as well as reduce idling time, making the overall schedule more efficient. The company has also redesigned a new forklift that has the ability to weight its’ freight, cutting out the wasted time of taking each freight to be weighed by a separate scale. (Boyle) · UPS: stocks have dropped 12% over the last year; UPS has plans to launch Cargo Finance, a finance business “aimed at helping small customers that need funds to keep their product orders flowing” and to “boost consumer demand”. Chris Vukas, UPS Capital Senior Managing Director, states that loans will average around $150,000, with one to two defaulting per every one hundred issued, and using the shipments themselves as collateral*. Coyle also states that “UPS does well with its cash flow, so they have some money they can use [for loans]. But it’s a little risky in today’s market.” UPS, like FedEx, is also trying to save fuel. Pilots are attempting a new landing technique where the plane engines will remain idle during landing. This is expected to save up to 70 gallons of fuel per flight. Another plan to cut costs is the use of telematics technology which tracks data such as speed, oil pressure, number of times the truck is put in reverse. This and other data is expected to help to reduce engine idling by 24 minutes per day, which could save $188 per driver. With 60,000 UPS trucks on the road this could save the company up to $11,280,000 a day. (Boyle) * One of its trial customers is Pedors, a $2 million Marietta (Ga.) importer of orthopedic shoes. Along with shipping Pedors products from Chinese factories to U.S. warehouses, UPS pays the Chinese supplier up front for the goods. Pedors wires UPS half the cost of the shipment once the shoes leave China and has 60 days to pay the balance, with interest. Pedors Chief Executive John O’Hare says working with UPS has helped his firm expand its product line. ‘This service cuts out all the middlemen in international trade,’ he says. Prior to the UPS deal, O’Hare relied on a bank credit line secured by his personal assets.” (Boyle)   · During the Beijing 2008 Olympics, UPS chose only to advertise in China, where Jim Andrews, editorial director of the IEG Sponsorship report, estimated advertising spending somewhere around $60 million on activities that ranged from ads to hospitality, basically anything that related to the Games. (**this can tie into the cultural aspect as well) UPS aimed the bulk of their advertising at China’s new business managers, “If UPS can fully assist the Beijing 2008 Olympics, they can fully assist you.” UPS was the official Olympic sponsor of express and logistics services and therefore accountable for every piece of equipment that had to do with the Olympic Games, ping-pong balls and even flooring, just to name a few. Joseph Guerrisi, the Asia-based vice-president of marketing stated that “By focusing on China, UPS aims to reach, among others, small- and medium- size Chinese companies that could take off in the near future.” UPS was clearly planning for the future, believing that the desire for U.S. goods would spread rapidly throughout China, therefore increasing the need for deliveries through the region. (Roth) · Although UPS’s main competition FedEx had been in China since 1995, this marketing strategy helped UPS to take over the lead in express parcel services. Competition between the two firms will remain steady. With regard to UPS’s full recognition during the 2008 Olympics, FedEx stated that they have “been in China for a long time and will be in China for a long time.” (Roth) But with the opening of new airport hubs in China it is obvious whose strategy will prove to be the most efficient and successful. <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">“FedEx China is losing money to grab market shares by lowering its prices of domestic express service in China by more than 70% in a year to the level set by domestic private companies.” Between October 2007 and August 2008, FedEx cut prices for its domestic delivery service four times. The new prices were set just slightly higher than the prices of China’s domestic private companies, which then accused FedEx of “conducting unfair competition, or dumping”. (china economic review) · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Although they have seen growth in their market share FedEx has continued to cut prices for the domestic services it offers regardless of its increasing costs. It has been reported that FedEx China has lost around $7.3 million from cutting costs in its domestic services. In response to the negativity FedEx’s price slashing received Jimmy Chen, regional vice president of FedEx China’s domestic service stated “By quoting more preferential prices, we hope more Chinese customers can use our services to optimize their supply chain”. (chinadaily.com) · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> A FedEx spokeswoman said in an e-mailed statement."By offering the new rates to the market, we aim to provide more customers with access to our reliable services so that they can optimise their supply chains." (marketavenue) · <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">UPS made plans to relocate its air hub from the Philippines to Shenzhen, southern China, and officially opened its hub in December 2008, placing it at the head of the rapidly expanding Chinese market. (ups.com) <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">**finding conflicting dates with this <span style="font-family: Wingdings; font-size: 12pt; line-height: 200%; msochartype: symbol; msosymbolfontfamily: Wingdings;">à <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> doing more research tonight to figure it out, will update tomorrow <span style="font-family: Wingdings; font-size: 12pt; line-height: 200%; msochartype: symbol; msosymbolfontfamily: Wingdings;">à <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;"> found a lot of articles so probably another couple of pages worth for the paper <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Other thoughts…. <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%; msolist: Ignore;">1. <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Should I look into how the Chinese economy in general was affected by UPS and FedEx opening these huge hubs? <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%; msolist: Ignore;">2. <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">also have a few random notes that I can add in if we need to add some length but I doubt we will <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">
 * <span style="font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Ultimate Impact of Competition between FedEx and UPS **
 * <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Fast Growth **
 * <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">New Strategies **
 * <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">UPS takes the lead in raising recognition in China **
 * <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 200%;">Price Slashing **
 * <span style="color: #4f81bd; font-family: 'Times New Roman','serif'; font-size: 12pt; line-height: 115%;">UPS opens air hub in China **

[] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">UPS AND FEDEX THINK OUTSIDE THE BOX Package delivery giants United Parcel Service <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">United Parcel Service -Search using: · <span style="color: blue; font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="color: blue; font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="color: blue; font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">and FedEx are making aggressive moves to pare back rising fuel costs. But UPS is also taking a more unusual step: trying to boost customer demand by loaning money to small businesses. On Sept. 9 the Atlanta company plans to unveil Cargo Finance, aimed at helping small customers that need funds to keep their product orders flowing. "We found that entrepreneurs would love to have someone provide them with working capital," says UPS Capital Senior Managing Director Chris Vukas. Given that the lending business has long been an albatross for nonfinancial companies--and isn't exactly a sweet spot for anyone these days--UPS's move reflects the lengths to which shippers are willing to go to get out of a bind. Having already watched their stocks drop 12% and 23%, respectively, over the past year, UPS and FedEx are trying to drum up new business and cut costs as the critical holiday shipping season approaches. Even with oil prices easing, analysts expect shipping volume to remain weak through 2009. Having already made obvious moves, such as limiting hiring and rolling out hybrid trucks that are more fuel-efficient, UPS and FedEx have decided it's "time to get unconventional," says John J. Coyle, professor emeritus at the Center for Supply Chain Research at Pennsylvania State University. FedEx, which is expected to report a 40% decrease in first-quarter earnings per share on Sept. 18, is testing new software that should streamline the takeoff and landing schedules of its larger airplanes and reduce idling time. Newly equipped forklifts can weigh freight instead of hauling goods to scales. (FedEx declined to comment before its earnings announcement.) WHAT ABOUT DEFAULTS? <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">UPS has asked pilots to taxi with one engine when possible, and it is experimenting with a type of landing during which engines are idle. The latter measure alone could save up to 70 gallons of fuel per flight. UPS trucks, about 60,000 of which are on the road every day, have begun using so-called telematics technology to track more than 200 pieces of data, including speed, oil pressure, and even the number of times a truck is put in reverse. That helped drivers reduce engine idling by 24 minutes per day, saving $188 per driver. Cutting fuel costs is one thing; building a finance business is another. UPS's Vukas figures loans will average around $150,000, and he anticipates one or two defaults for every 100 loans issued. "UPS does well with its cash flow, so they have some money they can use [for loans]," says Penn State's Coyle. "But it's a little risky in today's market." UPS has offered such financing to customers over the past decade, but much of the lending was government-backed. One of its trial customers is Pedors, a $2 million Marietta (Ga.) importer of orthopedic shoes. Along with shipping Pedors products from Chinese factories to U.S. warehouses, UPS pays the Chinese supplier up front for the goods. Pedors wires UPS half the cost of the shipment once the shoes leave China and has 60 days to pay the balance, with interest. Pedors Chief Executive John O'Hare says working with UPS has helped his firm expand its product line. "This service cuts out all the middlemen in international trade," he says. Prior to the UPS deal, O'Hare relied on a bank credit line secured by his personal assets. With UPS, the collateral is the shipment itself.
 * BYLINE:** By Matthew Boyle
 * SECTION:** News -- SHIPPING; Pg. 64 Vol. 4099
 * LENGTH:** 567 words
 * <span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking **

[]

<span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">FedEx remains tight-lipped over delays to Guangzhou hub opening


 * SECTION:** Focus; Pg. 6

FEDERAL Express has been forced to delay the opening of its $150m replacement Asia air cargo hub at Guangzhou Baiyun International Airport for the second time, after scrapping last Friday's planned operational launch. The US-based express courier and cargo giant remained tight-lipped on the reasons for the postponement, but insiders said it was having difficulties with Chinese customs authorities. Asked last week if the hub would open on Friday, a FedEx spokesman told Lloyd's List: "The most I'm allowed to say at this point is that there's something happening within these few days, but it isn't the opening, although it's definitely a milestone about the hub's development." FedEx had planned to open the facility on February 6 after delaying the opening date from December. The February launch date was confirmed after the completion of the first flight operations test at Baiyun Airport on December 17. The trial involved a Boeing MD-11 aircraft which landed at Baiyun from Subic Bay, Philippines, using the FedEx ramp control tower and the package sorting system before the aircraft departed for Charles de Gaulle International Airport in Paris. FedEx had initially planned to open the air hub, which will replace its Asia One complex at Subic Bay, last December, but signalled in mid-November the opening would be postponed. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> Despite being a US publicly listed company, the firm is officially yet to acknowledge the delays or give reasons for the hold- ups. The firm has avoided the 'D-word' by couching the problems using phrases such as "an updated schedule of operations" and "revised operations date". On the reasons for the delay from December to February, FedEx said it would give it "the necessary time to fully test all systems and processes, as well as work closely with the Guangzhou authorities to ensure all necessary approvals are in place". But industry insiders were more specific and pointed out FedEx was having particular problems with China customs at Guangzhou. "The issues are airport specific. The customs authority at Baiyun is not used to FedEx-type air express operations," one insider said. "Customs officials think they can interfere with shipments in transit through Baiyun from places such as Singapore or Vietnam to Europe. It would be a disaster for FedEx if China customs kept pulling in-transit shipments for inspection and clearance when the complex was operational. Instead of a one-day or two-day express delivery schedule, shipments could be delayed for days or weeks." <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> He added: "Such hold- ups would destroy the time-specific delivery guarantees FedEx offers its customers and for which they pay." The facility will sort up to 24,000 packages an hour at the start of operations using a unique package and sorting system that comprised 16 high-speed sorting lines, seven round-out conveyer belts and 90 primary and secondary document-sorting splits. The source added: "It is wise for FedEx to resolve these clearance issues now rather than let operations start and be disrupted." Another insider said that FedEx would base its flight crews in Hong Kong rather than closer to the airport in or near to Guangzhou. "The decision has been questioned internally because of the impact on flight and cargo operations if there are delays as crews travel from Hong Kong to Baiyun," the source said. "It's a three-hour road trip ndash; there could be delays passing through the border between Hong Kong and China or road accidents on the way. They are the risks to this operation that do not need to be there. Commenting on the planned launch of the Baiyun operation, FedEx Express Asia Pacific president David Cunningham said in December: "The hub reinforces our long-term commitment to this region and will further stimulate trade to and from the European Union and Asia,and between the US-Asia trade lanes by providing our customers with a fast and reliable service between the largest marketplaces in the world."
 * LENGTH:** 656 words

[] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">UPS goes faster, higher, stronger to raise China profile


 * BYLINE:** ALEX ROTH


 * SECTION:** REPORT ON BUSINESS: THE WALL STREET JOURNAL; SPONSORSHIP: OLYMPICS; Pg. B6

One of the busiest Olympic sponsors this year is a U.S. company whose TV ads won't be seen by American audiences. In a shift from previous Games, United Parcel Service Inc. is advertising only in China, a market the company calls "our next great frontier." In recent weeks, UPS's ads have become ubiquitous in China. The tagline on the billboards targets China's emerging business managers: "If UPS can fully assist the Beijing 2008 Olympics, they can fully assist you." The slogan refers to UPS's role as the official Olympic sponsor of express and logistics services, which makes it responsible for getting every piece of equipment associated with the Games - from Ping-Pong balls to the flooring for the gymnastics competitions- where it needs to go. UPS has been planning for this for three years, timing all the traffic lights along its Beijing delivery routes and measuring the height and width of every bridge, tunnel and overpass. The company estimates it will have handled 19 million pieces of equipment and other items by the end of the Games, using resources that include 2,000 employees and 217 trucks. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> By focusing on China, says Joseph Guerrisi, the Asia-based vice-president of marketing, UPS aims to reach, among others, small- and medium-size Chinese companies that could take off in the near future. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> UPS's arrangement with the Beijing Games is a big departure from the company's involvement in past Olympics, at which UPS was in the highest echelon of sponsors with global advertising rights. Nonetheless, UPS may spend as much as $60-million (U.S.) this time on Olympics-related activities from ads to hospitality, says Jim Andrews, editorial director of the IEG Sponsorship Report, a Chicago-based newsletter that tracks corporate sponsorships. UPS, which will also provide some Olympics services free as part of its sponsorship agreement, declines to disclose its costs. For UPS, making a good impression during the Games is crucial. The company believes China's appetite for U.S. products will grow exponentially in coming years, driving the market for deliveries across the Pacific and within Asia. In China, UPS is competing fiercely with FedEx Corp., **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** FedEx Corp., -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier the other U.S. giant of express shipping. UPS has had to play catch-up since 1995, when FedEx acquired what were the only existing rights to make all-cargo flights directly to China from the U.S. In 2005, FedEx also became the first express carrier with a direct flight from mainland China to Europe. Before 2004, the Chinese government permitted 20 cargo-only flights a week by American companies between the U.S. and China. But that is scheduled to increase to 131 flights a week by 2010 as China eases its restrictions, according to Robert Dahl, project manager of Air Cargo Management Group, a Seattle-based aviation consulting firm. FedEx and UPS are building new airport hubs in China that are set to open later this year. UPS is also competing against DHL, a unit of Germany's Deutsche Post, and the Dutch postal company TNT. FedEx officials say UPS's visibility during the Games doesn't worry them. FedEx "has been in China for a long time and will be in China for a long time," says Rajesh Subramaniam, senior vice-president of international marketing. [] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">UPS to establish air hub in China
 * LENGTH:** 540 words


 * SECTION:** FINANCE; Pg. 14


 * LENGTH:** 409 words

United Parcel Service, **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** United Parcel Service, -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier the world's largest package delivery company, plans to relocate its air hub in the Philippines to Shenzhen, in southern China, as it speeds up expansion into the fast-growing Chinese market. The facility, scheduled to start operation in 2010, will bolster UPS's operations in China, where FedEx and DHL Express, **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** DHL Express, -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier the package delivery arm of Deutsche Post, are also planning air hubs and battling fiercely for market share. UPS is also building its own air hub in Shanghai. Shenzhen Airport Co. **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Shenzhen Airport Co. -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days said Wednesday that it had agreed to build an 89,000-square-meter, or 958,000-square-foot, facility for UPS at Shenzhen International Airport. UPS will operate the facility under a 20-year renewable lease. The airport operator did not disclose the cost of the facility, but Shanghai Securities News put the figure at $180 million. It's a wise move for UPS, as Shenzhen and neighboring Hong Kong would no doubt provide much more volume than the Philippines, said Li Lei, a senior industry analyst with China Jianyin Investment Securities. The Shenzhen hub will be able to sort up to 36,000 parcels an hour, nearly five times the volume of UPS's hub at Clark Airport, north of Manila. Takeoffs and landings of UPS planes are expected to total at least 108 a week when the Shenzhen hub is up and running in two years, rising to no fewer than 140 in the medium to long term, the airport operator added. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> UPS, FedEx and DHL Express **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** DHL Express -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier are increasingly focusing on China, where rocketing foreign trade is driving demand for freight and logistics services. FedEx plans to complete an air hub in the southern Chinese city of Guangzhou by the end of the year, while DHL Express **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** DHL Express -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier already has a facility in Hong Kong and is building another in Shanghai. An air hub in Shenzhen will put UPS in direct competition with DHL's Hong Kong facility and FedEx's Guangzhou hub, but the biggest losers of their expansion in China will probably be Chinese airlines, which are already suffering losses in the air cargo business, analysts said. Chinese airline executives have said that many Chinese carriers, like the Shanghai-based China Eastern Airlines **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** China Eastern Airlines -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier and the Guangzhou-based China Southern Airlines, **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** China Southern Airlines, -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier are finding it especially hard to compete in deliveries of international cargo, because of a lack global networks and effective cost controls. China Southern has been in talks with Air France-KLM on a cargo venture for at least two years but has yet to announce a deal.
 * DATELINE:** SHANGHAI

[] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Global courier giants fear quick delivery of new Chinese legislation


 * BYLINE:** ANDREW BATSON, WALL STREET JOURNAL STAFF


 * SECTION:** REPORT ON BUSINESS: INTERNATIONAL; TRANSPORTATION; Pg. B9


 * LENGTH:** 524 words

China could pass new legislation for postal services as early as today that foreign companies worry will restrict them from competing in the nation's growing market for express delivery of documents. The major global express-delivery companies - DHL Worldwide Express Inc., FedEx Corp., TNT NV and United Parcel Service Inc. - have been lobbying the Chinese government for years as it worked on a new law governing mail delivery. Concern about the legislation has heightened in recent months, with businesses worldwide fearing the global downturn could lead to a revival of protectionism in many countries. A draft of the law was published for comment last year and now appears to be nearly finalized. In a statement, the legislature's office said its law committee suggested formally voting for the measure since a consensus had been reached. That means the new Postal Law is likely to be passed when the current meeting of the standing committee of the National People's Congress closes today. Foreign businesses are particularly concerned about an article in the draft that states that "Foreign companies may not invest in the business of domestic express delivery of letters." Though the latest version of the law has not been published, state media reports indicate that provision is still there. "We're told there's no substantive change" to the articles restricting foreign companies, said an industry executive who asked not to be named. "Here you have a law that certainly treats domestic companies differently from foreign companies," this person said. "It could have an impact on everybody's business going forward." The Conference of Asia Pacific Express Carriers, which represents the four big global express-delivery companies, has in the past urged the Chinese government to allow a level playing field in the domestic market. Yao Xin, the chief representative in Beijing of the organization, said they are still researching the issue and declined to comment before the law's formal passage. According to state media, a Chinese legislator, Qiao Xiaoyang, said this week that the new law would not affect the business operations of foreign delivery companies in China, and does not violate China's commitments to the World Trade Organization. China's existing law already gives the national post office a monopoly in delivering letters, so China's position has been that there is no real change for foreign companies. Most of the foreign delivery firms have been operating in China since the 1980s through joint ventures or other local operations. They fear the new regulations would make it harder for them to compete with the state-owned postal service and other local companies. Express delivery is a growth market in China at a time when traditional postal services are flat or declining: The volume of express-delivery items rose 26 per cent in 2008 and 21 per cent in 2007, according to government statistics. The numbers $267-million Value of China's postal package business in 1978. $21.7-billion Value of China postal package business in 2007.
 * DATELINE:** BEIJING

[] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Express parcel delivery players chase fast growth on mainland


 * BYLINE:** Charlotte So in Beijing


 * SECTION:** BUSINESS; Pg. 4

Domestic express parcel delivery services are booming on the mainland and attracting the interest of international players such as DHL, TNT and FedEx - which are either developing partnerships with local companies or eyeing takeovers to cash in on the lucrative market. By comparison with a national economic growth rate of about 10 per cent a year, express cargo volume is growing at 30 per cent. Typical of the growing user profile is Liu Rongsang, who explained that he bought an aircraft model over the internet and now expects to receive the model within a few days by express parcel delivery service. "It is very convenient as I can take delivery of the model for only an 8 yuan postal fee," said Mr Liu. Such a cheap delivery service on the mainland also explains why auction portals like taobao.com have become popular. Hoping to cash in on the flourishing market, DHL, TNT and FedEx are developing local partnerships, but rival United Parcel Services has opted to go it alone. UPS bought out the shares it did not own in a joint venture with Sinotrans in 2005, resulting in sole ownership of 89 operating facilities in 45 locations which cover more than 330 cities in China. "We mainly provide domestic express services to corporate clients in China at present since we have our own target group," said Daniel Chen, vice-president for Beijing Olympic sponsorship and operations at UPS Asia-Pacific in Beijing. International players face several challenges to provide domestic delivery services on the mainland, say observers. For a start, foreign airlines cannot run domestic routes, which forces them to lease cargo space from domestic airlines. FedEx, for example, has formed a partnership with Okay Airways, a Tianjin-based air cargo airline. Charges by local parcel delivery service EMS, a subsidiary of state-owned China Post, are much cheaper than those of international companies and brand recognition of foreign firms is not high on the mainland, which leaves individuals sticking with traditional express companies. But UPS believes it is beating the problem of getting known in the market. "Our brand recognition in China has hugely increased in the past 11/2 years, from 15 per cent to 50 per cent," said Mr Chen. Helping in this regard is the fact that UPS is a sponsor of the Beijing Olympic Games and in charge of the Olympic logistics centre in Beijing which is 211,000 square metres in area. The company has invested heavily in the programme and has seconded a staff of about 200 to form a core team in the logistics centre, and forecasts this will increase to as many as 2,000 by August when the Olympic Games begin. Deliverance DHL, TNT and FedEx all have mainland presence but UPS goes it alone Express cargo volume on the mainland is growing at an annual rate of 30%
 * LENGTH:** 468 words

[] <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">FedEx finally launches Chinese air cargo hub; The facility was initially set to open last December


 * SECTION:** Special Report - Asia Logistics; Pg. 11

FEDERAL Express, the US air express courier company, has been hit both by the global downturn and ongoing difficulties launching its Asia cargo hub at Guangzhou's Baiyun international airport in southern China. The impact of the global slump, which adversely affected the firm's second quarter results, is likely to be felt more when the company reports its third quarter results in March. Outlining the challenge faced by the company, chairman, president and chief executive Fred Smith said in December: "Our financial performance is increasingly being challenged by some of the worst economic conditions in the company's 35-year operating history." He indicated there had been a trend towards a slowdown in shipments and there was the expectation "economic conditions will remain very difficult through calendar 2009". <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> Globally, FedEx Express, **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** FedEx Express, -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier which includes the firm's international courier business, posted a 1% rise in operating revenue in the second quarter to $6.1bn in the three months to November 30, up from $6.04bn a year earlier, while operating income edged up 2% to $540m year-on-year. No separate figures were provided for Asia, but the company said overall volume and revenue growth at FedEx Express **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** FedEx Express -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier "were significantly impacted by global economic weakness", while its international priority package business saw a 1% increase in revenue, but package volumes dropped 7%. FedEx also avoided giving any guidance about its results for the third quarter to February 28, partly because of "significant economic uncertainty", although capital spending has been cut from an estimated $3bn to $2.4bn in the current financial year. In China, the company was forced to delay the launch of its $150m air cargo hub at Guangzhou Baiyun international airport, which will replace its current facility at Subic Bay in the Philippines. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> FedEx initially planned to open the facility in December, but postponed this to February 6 when the first operational flight was made by a Boeing **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Boeing -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier MD-11 from Paris' Charles de Gaulle International Airport. But while the complex is operational, it is not yet officially open. A FedEx spokesman said: "This is after all a complex project so we wanted to make sure things are operating smoothly every step of the way to ensure high quality of service for customers before we are to officially announce its opening." Once the facility is officially open, FedEx "will decommission its facility at Subic Bay, Philippines, in due course". <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> The Baiyun complex was planned to replace Subic Bay when FedEx ordered Airbus A380 freighters to replace its existing Boeing **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Boeing -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier MD-11s because the European-made aircraft was too large to land at Subic. The Airbus order **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Airbus order -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier was cancelled and FedEx ordered 15 Boeing **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Boeing -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier 777 freighters, exercising an option for a further 15 aircraft last month. Flight crews said the move to Guangzhou was still necessary because the 777s, which can carry up to 103 tonnes, were also too big to land at Subic. FedEx was also forced to cancel its five-year deal with China's Okay Airlines centred at Hangzhou's international airport, about 200 km from Shanghai, to provide domestic air cargo express services in China following financial difficulties at Okay Airlines. <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;"> FedEx used three Boeing **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** Boeing -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier 737 cargo aircraft from Okay, under a deal that was agreed in June 2007, to help provide next morning and day-definite courier services to more than 200 cities in China. FedEx has teamed up with Yangtze River Express, part of the Hainan Airlines group, to maintain its domestic air express network. However, there has been brighter news after FedEx Express **<span style="font-family: 'Arial','sans-serif'; font-size: 18pt;">Enhanced Coverage Linking ** FedEx Express -Search using: · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Profile · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">News, Most Recent 60 Days · <span style="font-family: 'Arial','sans-serif'; font-size: 12pt;">Company Dossier launched a new Airbus A310 freighter flight to Hanoi, the Vietnamese capital, last September in the face of increased demand for air express services. The move strengthened the FedEx AsiaOne network, which provides more than 400 intra-Asian flights per week connecting 19 cities.
 * LENGTH:** 641 words

[]

= UPS opens Asia-Pacific hub in Shenzhen =

By Wang Xiaotian (China Daily) Updated: 2010-02-10 11:11




> || ||

> UPS launched its inaugural flight at Shenzhen's Bao'an International Airport yesterday, marking the opening of its new intra-Asia hub, replacing operations at the former Clark Air Force Base in the Philippines. <span style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 10.5pt;">The new UPS Asia-Pacific hub cost an estimated $180 million and its 400 staff will be capable of sorting 18,000 packages an hour, according to UPS. The hub will provide overnight delivery services between Asia-Pacific countries. China, Japan and South Korea now account for more than half of the company's total intra-Asia volume. "The inauguration of our flights in Shenzhen is part of our continued effort to help our customers execute trade in the region more efficiently," said Derek Woodward, president of UPS Asia-Pacific. He added that existing operations at Clark would be refocused to serve as the main import and export gateway for the Philippines. He did not offer job loss estimates for the Clark base. On Feb 8, UPS announced a better-than-expected performance in the fourth quarter of 2009, due to the strong performance of its international segment. In the Asia-Pacific region, export volume grew 10 percent in the fourth quarter compared with the same period in 2008. "During the fourth quarter, we saw a noticeable increase in our overall flow of goods," said Richard Loi, head of the firm's China division and senior vice-president of UPS Asia-Pacific region. According to Loi, China-to-Europe volume grew by more than 15 percent, while intra-Asia volumes increased by more than 5 percent. "Of course the Chinese market has always been a top priority for UPS and with the official opening of our Asia-Pacific hub we are the only logistics and supply chain solutions provider with two hubs in China. We plan to continue extending the roots we have put down in China as part of our commitment to providing services to the Chinese market," he said. Intra-Asia trade will grow at an average rate of 12.2 percent annually through 2020, versus Asia's trade with the US, which is projected to grow 7.3 percent annually over the same period, a TIME report said. UPS is not alone in extending its multi-hub strategy and accelerating infrastructure investments in China. In February 2009, FedEx opened a $150-million Asia-Pacific hub in Guangzhou's Baiyun International Airport. Its main Asian hub was also previously based in the Philippines. Prior to that, UPS opened an international air hub in Shanghai in December 2008 with a total investment of $125 million. > || || <span style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 10.5pt; line-height: 115%;">DHL has also announced plans to spend $175 million to build its north Asian hub in Shanghai, with the facility to be completed in the second half of 2010. <span style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 10.5pt;">"That proves China has become one of the most promising countries in their global plan," said Sun Feifei, an analyst at Guosen Securities. "All international delivery players hope to seize the opportunity in this market ... but their less developed domestic network in China compared with Chinese counterparts may restrict their performance ... despite constant investments in these regional transfer centers," Sun said.

[]

> || ||
 * **<span style="color: #330000; font-family: 'Verdana','sans-serif'; font-size: 13pt;">UPS Opens Major Hub In Shanghai, China ** ||


 * || **<span style="color: #996633; font-family: 'Arial','sans-serif';">Press Release ** ||

>
 * **<span style="color: #996633; font-family: 'Arial','sans-serif';">Facility "Built for Speed and Reliability; "Accelerates Flow of Express Packages and Heavy Freight **<span style="color: black; font-family: 'Arial','sans-serif'; font-size: 10pt;">


 * **<span style="color: black; font-family: 'Arial','sans-serif'; font-size: 10pt;">SHANGHAI, Dec. 9, 2008 **<span style="color: black; font-family: 'Arial','sans-serif'; font-size: 10pt;"> - UPS (NYSE:UPS) today placed in service a new international hub here, improving access to China and speeding the movement of express packages and heavy freight around the world.


 * The facility is strategically located in Shanghai Pudong International Airport right in the heart of the Yangtze River Delta area and now becomes the key gateway linking China to UPS's global network.


 * It features the largest on site 24/7 customs inspection area in Shanghai and was built to a unique design that facilitates rapid handling of express packages in addition to heavy freight.


 * "Everything about this facility was built for speed and reliability," said Dan Brutto, president of UPS International. "Linked now to our vast integrated transportation network, it opens wider the doors of commerce with China. We believe Shanghai will become an even more attractive business location because our customers will benefit from a world-class UPS facility that provides rapid access to the world."


 * Joining Brutto at a special opening ceremony today were Mr. Wu Nian Zu, Chairman and President of the Shanghai Airport Authority (SAA); Derek Woodward, President of UPS Asia Pacific Region, and Richard Loi, the head of UPS China.


 * Mr. Wu, Chairman of SAA, said, "As the world's third largest airport by cargo tonnage, and with annual growth of 11.5%, Shanghai Pudong International Airport offers a well-established air network that connects 179 international and domestic cities. The opening of the UPS hub, the first foreign-run hub in the West Cargo Handling Area further accelerates the implementation of the national Shanghai Aviation Hub Strategy, strengthens the position of the airport, and boosts the economic development in Shanghai, the Yangtze River Delta and China."


 * The hub features 117 conveyor belts and 47 docking bays and has a package sorting capacity of 17,000 pieces per hour. It also is designed, however, for simultaneous rapid processing of heavy freight, recognizing the different types of business done by importers and exporters in China.

> The dedicated customs area is equipped with advance technology enabling automated import and export inspection thereby increasing overall package flow efficiency. With a touch of a button, specific packages can be routed off the main conveyor belts for inspection without impacting the flow of remaining packages. >
 * To speed the processing of packages and freight, UPS collaborated with Shanghai Customs to deploy an industry-first customs risk management system at the facility. By providing UPS information to Customs ahead of time to identify high-risk items for inspection, the system minimizes checks and expedites shipment clearance for delivery to recipients.

> With its high sorting capacity, the hub improves delivery times for customers in eastern China by a full day. In addition, pick-up times for express and cargo shipments in Shanghai will be pushed back by one hour and four hours, respectively, so customers have greater flexibility in shipment preparations. >

> Another feature is the "Shipper Build Area" at the General Cargo Handling Area, which allows customers to perform on-site packaging before goods are loaded onto the aircraft. This eliminates the current industry practice of processing goods at a separate facility, once again saving time. It also improves service to customers who ship items requiring special handling, such as precise instruments. >

> "China is UPS's top international priority," said Loi, the head of UPS China. "We have continued a steady path of expansion here and this latest facility stands as a strong testament to our long-term commitment. We are grateful for the leadership of Chairman Wu and the strong support of the Chinese government, without which today's event would not have been possible." >

> **<span style="color: black; font-family: 'Arial','sans-serif'; font-size: 10pt;">About SAA ** > <span style="color: black; font-family: 'Arial','sans-serif'; font-size: 10pt;">The Shanghai Airport Authority (SAA) is responsible for the operation and management of two international airports in Shanghai - Pudong and Hongqiao. With 2-digit average annual growth rates, the cargo tonnage of Shanghai Pudong International Airport accounts for over 85% of the Shanghai air cargo market. According to statistics from ACI, over the last five years, cargo tonnage in the Shanghai Pudong International Airport has increased from 1.19 million in 2003 to 2.5 million in 2007,with its global rank climbing from 17th place to the 5th place. In August of this year it had climbed to third place, and cargo tonnage is expected to hit 2.8 million by the end of the year. SAA is committed to implementing the national Shanghai aviation hub strategy to establish Shanghai's airports as major international cargo hubs. The West Cargo Handling Area of Shanghai Pudong International Airport opened on 1 December 2008. Located in the west side of the third runway at the Shanghai Pudong International Airport, it covers an area of 1.67 square kilometers and consists of a public cargo terminal, a base cargo terminal and a transit center, with 38 parking stands for all-cargo aircraft and 2.45 million tonnage of designed capacity. ||  ||

[] <span style="color: #f47920; font-family: 'Arial Narrow','sans-serif'; font-size: 18pt;">FedEx Guangzhou Hub In February, 2009, our $150 million Guangzhou facility began operations and will serve as the major hub for the entire Asia Pacific region. This strategic move gives FedEx additional shipping capacity and will help you streamline your business practices when shipping to and within the rapidly developing Asia Pacific market. The Guangzhou hub will especially appeal to businesses that demand premium-level services for their shipments requiring express service. <span style="color: #333333; display: block; font-family: 'Arial','sans-serif'; font-size: 13.5pt; text-align: center;">Guangzhou Hub //<span style="color: #333333; font-family: 'Arial','sans-serif'; font-size: 10.5pt;">At a Glance // · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Location: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> Guangzhou Baiyun International Airport
 * <span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">To access the fast-growing China and Asia-Pacific markets, put your business in the center of the economic action. **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">

> (Guangzhou, China) · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Employees: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> 900 · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Capacity: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> 35,000 packages and documents sorted per hour · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Control: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> High-tech scanning, tracking and control technologies · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Security: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> New state-of-the-art systems · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Number of Flights: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> 136 per week · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Surface Area: **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> 82,000 square meters Investments like these are initiating some powerful regional conversations and helping companies large and small navigate this market and grow their business. And recent forecasts for the Asia Pacific region reveal exciting opportunities: · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">World air cargo traffic is predicted to expand **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> at an average rate of 5.8 percent in the next 20 years, with intra-Asia growth leading the way at 8.1 percent per year and Asia-to-North America traffic growing at 6.7 percent per year.* · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">China accounts for the largest share of the Asia-to-North America air cargo market, **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;"> reaching 36.7 percent in 2007. China’s economic growth and demand from North America and Europe economies should help bolster air trade prospects for the region.* · **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">The Europe-to-Asia air cargo market shows consistent growth **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">. Part of this growth is attributed to the fast-growing segment of documents and small packages. FedEx remains committed to building our global network of reliable delivery services. Our new hub in Guangzhou, Southern China is the region’s largest air cargo hub and offers state-of-the-art technologies to provide fast access to new and emerging markets in the Asia-Pacific region and beyond. <span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 7.5pt; line-height: 115%;">* Boeing 2008-2009 World Air Cargo Forecast.
 * <span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">Take advantage of exciting new business opportunities. **<span style="color: #666666; font-family: 'Arial','sans-serif'; font-size: 9pt;">

[]

<span style="color: #000033; font-family: 'Verdana','sans-serif'; font-size: 14.5pt; line-height: 115%;">FedEx China losing money to gain market share <span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 8pt; line-height: 115%;">By Nie Peng (chinadaily.com.cn) Updated: 2008-09-28 17:11 <span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 8.5pt; line-height: 115%;">**Comments**( 0 ) **Print** [|**Mail**] <span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 9.5pt;">FedEx Express has witnessed an apparent rise of its market share in China since June when, for the third time in a row within a year, it slashed prices for domestic services despite soaring costs. The company's delivery volume in China has quadrupled since the price cut, The Economic Observer said. A source told the newspaper that FedEx's American headquarters had allowed its China service to lose money for a maximum of three years in hopes of increasing market share to further tap the large potential in China. FedEx China's monthly loss in its domestic service was estimated at over 50 million yuan ($7.30 million), the report said. China's express delivery companies, which were planning to raise prices to offset increasing costs, are now watching closely for FedEx's next move. Some said they expected foreign rivals to take control of the China market within the next five years, according to the newspaper. The Ministry of Commerce has launched an investigation into claimed damages done to Chinese express delivery firms by FedEx's alleged "dumping activity", the newspaper reported. FedEx entered the Chinese market in June 2007. At the time it offered delivery services of high value-added products for customers who underlined efficiency and reliability, according to Eddy Chan, head of FedEx China. "Correspondingly, the company adopted a high pricing strategy and its services were far more expensive than EMS (China Post Express Mail Service) and services by private delivery companies that were well-known for their low prices," said Chan. However, the company found the strategy was given the cold shoulder by most of its customers, who had gotten used to the low price services offered on the buoyant private courier market. Price then was the most important factor in customers' decision, so long as the service quality was basically guaranteed and the time requirement roughly met. FedEx cut service prices in October 2007 and early this year, and in June it further axed prices by up to more than 40 percent. Currently, its domestic service prices are lower than EMS and almost the same as that of the country's private delivery companies. "By quoting more preferential prices, we hope more Chinese customers can use our services to optimize their supply chain," said Jimmy Chen, regional vice president of FedEx China's domestic service. Xu Yong, an analyst with the China Express Consultant website and a former employee with FedEx China, said FedEx's manual and operating costs were three to five times that of Chinese private delivery companies. With huge spending on hardware, the company's China domestic service can hardly make ends meet, Xu told The Economic Observer. Xu said FedEx adopted a high pricing strategy when it first entered the Chinese market because it wanted to control the service scope for fear of failing to guarantee service quality in an unfamiliar market. Now that it has gained experience and has the potential to offer more services, the company again took advantage of the price leverage to enlarge its business scale in order to reduce costs and increase revenues, he said. FedEx's move to axe service prices has surprised and caused concerns among its Chinese rivals. Yuan Guoli, director of the delivery bureau of China Post, said the move by FedEx against the backdrop of rising costs had put great pressure on EMS. An executive of S.F. Express, China's largest private express delivery company, said important changes would take place within five years if FedEx stuck to its low-price strategy in the long run.
 * <span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 9.5pt;">Wrong target leads to price slashes? **<span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 9.5pt;">
 * <span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 9.5pt;">Panic among Chinese rivals **<span style="color: #000033; font-family: 'Arial','sans-serif'; font-size: 9.5pt;">

[]


 * ||  || **<span style="color: black; font-family: 'Arial','sans-serif'; font-size: 14pt; line-height: 95%;">FedEx cuts rates in fiercely competitive China ** ||


 * <span style="color: black; display: block; font-family: 'Verdana','sans-serif'; font-size: 9pt; text-align: center;">Updated: 2008-07-02 Source:XFN-ASIA ||







Package delivery company FedEx Corp has lowered its rates in the fiercely competitive Chinese market despite higher fuel prices. FedEx, which started its domestic shipping service in China last June, cut charges for its quickest service, FedEx First Overnight -- which guarantees delivery before 10:30 a.m. the next day -- by as much as 77 percent. Its new prices for sending a 2-kg parcel from Beijing to Shanghai via First Overnight scheme is 31 yuan, or about a third of the 90 yuan charged by EMS, a state-owned courier agent. A FedEx spokeswoman said in an e-mailed statement."By offering the new rates to the market, we aim to provide more customers with access to our reliable services so that they can optimise their supply chains." Beijing raised nationwide retail diesel and gasoline prices by nearly 20 percent last month, the biggest one-off rise ever, and analysts expect more increases in coming months as fuel prices in China are still well below global market levels. FedEx reported a fiscal fourth-quarter loss of $241 million, or 78 cents a share in June, citing record high fuel prices and a weak U.S. economy. It gave no details about its performance in China. ($=6.86 yuan) ||  ||   ||
 * ||  || <span style="color: black; font-family: 'Verdana','sans-serif'; font-size: 9pt;"> [|Keywords] : [|port] ..