DHL expands in China
Joint-venture will develop domestic network
DHL Express is “quietly” going about growing its domestic Chinese volumes through its latest joint-venture.
This month, Shanghai Quanyi Express and Beijing Sinotrans Express – both owned by DHL-Sinotrans, a JV between DHL and Sinotrans – launched Sinotrans-Apex to develop domestic express delivery business in China.
Charlie Dobbie, Executive VP for global network operations and IT at DHL Express, admitted that increasing domestic business went against its recent priority of focusing on developing international volumes.
“It’s a new foray for us [in China],” said Dobbie. “It’s only over the last 12 months we have decided to take that step, so it’s very early days.
“We are going about it quietly. We want quality first, and there is some way to go to build a national network. For now we are just organising it, developing it and putting it together – seeing what is required to make it successful.”
Dobbie said the new brand would concentrate on the premium end of the market and not offer to take “any box anywhere for very little money”.
He added that there were no current plans for acquisitions in order to grow market share.
“It could be a mixture of ‘grow our own’ and acquisitions, if the right opportunity came up in the future,” he said. “But my sense is that we would prefer to grow our own. We are hesitant about acquisitions of domestic organisations and then trying to fit them into a network.
“We have had some glaring examples of where that is impractical, the US for example.”
Currently, Sinotrans-Apex provides services in 662 major Chinese cities and economic centres. But it plans to expand to 800 cities over the next two years, to cover developed regions such as the Pearl River and Yangtze River deltas, Beijing and Tianjin, and by the end of 2011, Sinotrans-APEX aims to have a network of 25 hubs and sorting centres across the country.
In contrast to its strategy in China, DHL has been pulling out of domestic express operations in recent years.
In 2009 it ceased US and Irish domestic operations, and sold its parcels businesses in France and the UK in 2010.
The total cost of DHL’s five-year experience in the US domestic express market was estimated at US$9.2 billion, including the acquisition of Airborne and $3.9bn in estimated restructuring costs in 2008 and 2009.
This month, Shanghai Quanyi Express and Beijing Sinotrans Express – both owned by DHL-Sinotrans, a JV between DHL and Sinotrans – launched Sinotrans-Apex to develop domestic express delivery business in China.
Charlie Dobbie, Executive VP for global network operations and IT at DHL Express, admitted that increasing domestic business went against its recent priority of focusing on developing international volumes.
“It’s a new foray for us [in China],” said Dobbie. “It’s only over the last 12 months we have decided to take that step, so it’s very early days.
“We are going about it quietly. We want quality first, and there is some way to go to build a national network. For now we are just organising it, developing it and putting it together – seeing what is required to make it successful.”
Dobbie said the new brand would concentrate on the premium end of the market and not offer to take “any box anywhere for very little money”.
He added that there were no current plans for acquisitions in order to grow market share.
“It could be a mixture of ‘grow our own’ and acquisitions, if the right opportunity came up in the future,” he said. “But my sense is that we would prefer to grow our own. We are hesitant about acquisitions of domestic organisations and then trying to fit them into a network.
“We have had some glaring examples of where that is impractical, the US for example.”
Currently, Sinotrans-Apex provides services in 662 major Chinese cities and economic centres. But it plans to expand to 800 cities over the next two years, to cover developed regions such as the Pearl River and Yangtze River deltas, Beijing and Tianjin, and by the end of 2011, Sinotrans-APEX aims to have a network of 25 hubs and sorting centres across the country.
In contrast to its strategy in China, DHL has been pulling out of domestic express operations in recent years.
In 2009 it ceased US and Irish domestic operations, and sold its parcels businesses in France and the UK in 2010.
The total cost of DHL’s five-year experience in the US domestic express market was estimated at US$9.2 billion, including the acquisition of Airborne and $3.9bn in estimated restructuring costs in 2008 and 2009.
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