Beijing to foster local rivals to FedEx and UPS

PUBLISHED : Thursday, 05 January, 2012, 12:00am
UPDATED : Thursday, 05 January, 2012, 12:00am


The Ministry of Transport will seek to expand the mainland's express courier sector by 150 per cent by 2015, turning the service into a 143 billion yuan (HK$175.2 billion) business.

Under the government's latest five-year-plan, the ministry will nurture at least five large Chinese express courier companies, each with revenue of more than 1 billion yuan by 2015, in the hopes of positioning them against global leaders such as FedEx and UPS.

'The 12th Plan period is an important strategic opportunity for the rapid growth of our nation's express courier industry. The use of express courier services is increasingly vital, with the explosive growth of e-commerce,' the ministry said in a statement on its website.

KPMG said a major factor in the recent domestic growth of logistics was e-commerce. 'This business is set to continue growing rapidly,' it said in a report.

Morgan Stanley forecasts China's e-commerce revenue will grow 75 per cent from 2010 to 2013.

'We are shocked by the rate at which Chinese shop online. Online business in China has grown a lot. They need efficient procurement or consumers will complain,' said Anthony Wong, a former president of the Hong Kong Logistics Association.

'The big five Chinese express courier companies will challenge international giants such as DHL and FedEx,' Wong said. 'DHL and FedEx have been unable to conquer the local market.' Establishing large express courier companies would make it easier for Beijing to collect taxes from them, as opposed to the plethora of small couriers that tend to fly under the radar, Wong said.

By 2015, the ministry wants express courier services to cover 98 per cent of the mainland's municipalities and provincial capitals, with 95 per cent availability of 24-hour delivery services within the same city.

On December 30, Transport Minister Li Shenglin called for 'stable and moderate' growth in transport infrastructure spending this year.

It was difficult to maintain fast growth in the nation's transport and freight sector owing to the weak outlook for the sector at the global level, Li said. He also pointed to funding shortages for transport infrastructure construction. 'The transport sector faces huge pressure and challenges.'

The mainland's fixed-asset investment in highways and waterways rose 7.1 per cent to 1.42 trillion yuan last year, Li said. That rate is much slower than the 18.6 per cent growth recorded in 2010 and the 33.7 per cent growth in 2009. Much of that was driven however by the government's 4 trillion yuan stimulus spending following the global financial crisis of 2008.

Investment in road construction has already slowed. It grew 7.8 per cent to 1.24 trillion yuan for the whole of 2011, according to the transport ministry. In comparison, during the first nine months of 2011, it grew 12.9 per cent to 882 million yuan, which in turn was 4.6 percentage points lower than 2010's growth.

Last year 71,400 kilometres of highways were built on the mainland, including 11,000 kilometres of expressways, raising the total length of the mainland's expressways to 85,000 kilometres, the ministry said.

Fixed-asset investment in the aviation industry totalled 69 billion yuan last year, which included five new airports.