DHL Express is reportedly in talks to sell its domestic Chinese business just one year after ahigh-profile launch while sister company DHL Freight has moved into the USA with a regional
acquisition.DHL-Sinotrans, the DHL Express joint venture in China, wants to sell subsidiary A Plus Expressto air freight company Uni-Top Industry, according to several Chinese newspaper reports this week,which cited DHL sources. The deal, put at CNY 100 million (€10.6 million), could be completed bythe end of July. A Plus Express (APEX), founded in 2000, was bought by DHL-Sinotrans for CNY 300million (€32 million) last year, the reports said.
Diverse potential reasons were given for the market exit, including the impact of the newChinese postal law on business activities, high operating costs and the competitive challenges ofsetting up a large-scale domestic network in China.
A DHL spokesman told CEP-Research: “We do not comment on market speculation or rumours.”
Neither DHL-Sinotrans nor APEX revenues are officially disclosed. Shenzhen-based Uni-topIndustry, with 300 employees, offers international freight forwarding and domestic distributionservices. According to information on its website, it also has a subsidiary cargo airline withthree B747-200Fs based at Wuhan International Airport.
If the Chinese reports are accurate, the disposal would mark a major strategic U-turn from DHLExpress’ previous aim of large-scale expansion in the domestic Chinese express market. It wouldalso be the latest in a series of exits from domestic express markets around the world, includingthe USA, Canada, the UK, France and Ireland, that were made due to large financial losses.
Only last June, DHL-Sinotrans launched a newly-branded domestic operator under the‘Sinotrans-APEX’ name, offering same-day, next-day and deferred deliveries covering 662 towns andcities. The combined Sinotrans-APEX business had close to 8,000 employees, nearly 4,000 vehiclesand a network of 12 hubs. At the time, DHL-Sinotrans said the domestic express network would beexpanded to 25 hubs and cover 800 cities by end-2011.
In October 2010, Jerry Hsu, DHL Express head of Greater China and just recently named as new CEOAsia Pacific, told CEP-Research that the fast-growing Chinese market had become DHL Express’largest market by volume and the company saw “lots of opportunities” to expand and grow in thecountry. In the domestic market, Sinotrans-APEX wanted to “deliver with quality and on time for afair price”, he explained.
The Chinese international express market was estimated to be worth €1.7 billion in 2009 whilethe domestic express market is believed to have overtaken the international market due to thedramatic growth of e-commerce in the country. “The big opportunity is B2C and C2C shipments,” Hsusaid at the time. “Growth is big, volumes are growing but the market is young and fragmented. DHLcan help to develop it.”
Meanwhile, the trucking business DHL Freight has gained a foothold in the US road truckingbusiness with the acquisition of Standard Forwarding, a regional company based in East Moline,Illinois, with some 500 employees.
The privately-owned trucking firm, with 300 trucks and 650 trailers, offers overnight LTLservices in Illinois, Indiana, Iowa, Minnesota and Wisconsin as well as to and from Canada. Thecompany will operate as a standalone business under its established brand-name and under itsexisting management.
DHL Freight is one of Europe’s largest trucking operators with revenues of €3.7 billion in 2010.It was number two behind DB Schenker in 2009 with a market share of 2.3% of the €148 billionmarket, according to DP DHL information.
