DHL Opens Domestic Air Freight

Sunday, January 28, 2007 2:12
Comments Off on DHL Opens Domestic Air Freight

Well, it didn’t take long. The WTO completely opened up completely, and DHL made their announcement:

“China has become one of the most significant logistics markets worldwide, with an abundance of open regulations and huge growth potential. We are confident that the license to operate and gain entry into the domestic airfreight market will provide fresh opportunities and improved management of heavy airfreight from door to door for our customers,” said Peter Landsiedel, CEO – Asia Pacific, DHL Global Forwarding.

For UPS, FedEx, and TNT, this announcement will not present much of a challenge for them to meet as each are fully capable through in-house and external arrangements of offering the same service already.

Where this becomes interesting though is in that for the first time DHL will be the only ones who are in full control of their cargo under the DHL flag (FedEx uses long time partner, and recently acquired, Datian; UPS predominately uses Sinotrans), and thus they will be able provide a single point of payment and receipt. Critical for multinationals who are distributing in China and would like to claim back their 7% VAT.

Key to the success of this service is going to be the ability of carriers to carry full loads. Announcement like this are great tools as they advertise full capabilities in China (something everyone has been waiting for) and they boost moral. however, without cargo, this service will result in unsustainable losses that will lead them back to outsourcing.

I would expect UPS and FedEx, both of which have made China based air hub announcements, to release their new services in short order as well and it will be interesting to see what changes (if any) are seen in the market place.

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