This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Are UPS, FedEx Tough Enough for China’s Competitive Courier Chaos?

The consultancy McKinsey & Co. predicts China online retail sales could more than triple from recent levels to US$ 650 billion by 2020. That’s a lot of package deliveries.

Indeed, enormous growth in the domestic logistics industry in China has been driven in recent years by what are now standard, warehouse-to-apartment door deliveries of consumer goods bought through online retailers such as (JD), Vipshop (VIP) and soon-to-list Alibaba.

More than a dozen major delivery companies currently compete for this booming business, which can be both cutthroat and chaotic. Packages arrive every day of the year, and often late into the night, since a courier’s earnings can be pegged to the number of items delivered. Couriers have strong incentive to work fast and dodge traffic jams by driving their electric vehicles on sidewalks.

READ MORE: 8 Stocks George Soros Is Buying in 2014

Some online companies such as operate their own delivery services. But retailers selling through Alibaba’s Tmall or Taobao rely on Chinese logistics providers such as SF, ZTO, Shentong and YTO, depending on the origin and destination.

Because of fierce competition, package delivery prices are relatively low, even for express service. If you work in Beijing’s software developer district, for example, SF will carry your 1-kilogram box to downtown Shanghai within one day, door to door, for only $24.

To date, the much more lucrative international air shipping business has been the bread-and-butter for UPS and FedEx in China.

FedEx’s subsidiary Federal Express (China) Ltd. is based near the Beijing airport. The company stepped into China for the first time near Hong Kong more than a decade ago, started the industry’s first China-Europe direct flights in 2006 and launched deliveries in 2007. Today one of its 12 global air hubs is in Guangzhou.

READ MORE: Yahoo! Remains the Best Way to Play Alibaba IPO

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
FDX $168.00 0.00%
UPS $95.38 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs