FedEx Goes Next: 19 Cities Guaranteed

Tuesday, March 20, 2007 5:28

Following all the excitement last week, FedEx announced today (WSJ, Business Week, & others) that they will offer guaranteed service to 19 cities in China.

While the announcement did not mention cities, it did mention that their partner would be Okay Airways (so small they do not have website… here is their Wiki site).

fortunately, the discussions that the CEO spoke of in a March 1 article went ok, and now the airline’s 3 airplanes will be managing FedEx’s domestic air movements …. for the time being.

while 19 cities on 3 planes may not seem like a lot to those outside China, it is just enough for now as many of the 2nd tier cities are only now capable of supporting a regular flow of documents.

In addition, with the Shanghai based FedEx hub currently under construction, only tying down 19 cities now will allow FedEx some room to maneuver later.

I would be interested in knowing how the local deliveries will occur, and whether or not this will get FedEx around the China Post monopoly issue.

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4 Responses to “FedEx Goes Next: 19 Cities Guaranteed”

  1. Eric Joiner says:

    March 20th, 2007 at 7:38 pm

    Not sure this is a real surprise. FedEx just announced buyout of their Chinese agent, DTW…and DTW’s domestic china infrastructure. DTW had been general agent for FedEx in China for some time.

    Seems like basic rebranding of the DTW network to me.

    Eric

  2. rbrubaker says:

    March 20th, 2007 at 10:40 pm

    Eric

    This deal is seperate from the DTW acquisition that closed last year.

    I am not surprised either, but I am curious to know how long the deal lasts as FedEx is building an air hub in China (which I am sure in some part is being built specifically to service these same cities).

  3. Absurdfool says:

    March 26th, 2007 at 9:10 pm

    FedEx still deeply relies on local LSPs, particularly for 2nd (and below) tier cities. Businesses there aren’t good enough to support its own cargo flight. The three chartered planes of OKA which fly major cities are quite fit for now, I believe.

  4. rbrubaker says:

    March 27th, 2007 at 1:00 am

    Absurdfool,

    100% spot on. All of the internationals right now are relying on partnerships, and will wait until the volume is there before building.

    Prologis is making this easier for them as they are building the facilities and renting out in bit sized chunks. As more of the real estate funds (I have been approached by several recently) look to get into the industrial space, expect to see logistics firms add dots to the map.

    As an aside, I was told that the recent DHL lease was not from Wal-Mart (I was almost sure it was them), but from a big U.S. FMCG. Thinks toothpaste, soap, and deodorant.