DHL ppt

“China became the most lucrative location for foreign express and logistics Companies”

Reasons for entry of foreign players in China.

• Inefficient logistics infrastructure• Insufficient & unreliable highway system• Antiquated roads & ports• Over-stressed Civil Aviation System• EMS before foreign players entered China

Reasons for success of foreign players in China

Door to door delivery

Security

Track and Trace technology

Expedited Customs Clearance

High level of reliability

Global Service

Speed of delivery

Services offered by DHL

Customer

DHL’s strategy to enter China

• 1986, 50-50 JV, DHL – Sinotrans, Beijing December 1986

• DHL's global expertise + the local advantages of Sinotrans market leadership position with 40% market share

Entry strategies from the Competitors

Fed-Ex*Entered china in 1984

*JV in 1999 with Tianjin based Da Tian Air Services Ltd.

* Launched its express facility in Shenzhen in 1999.

* Led to network coverage of 220 chinese cities by fedex at

the end of May 2003.

UPS

* Entered China in 1988* Mode: Agent Partnership

with Sinotrans* UPS delivered packages or

documents to China and Sinotrans handled their

distribution within China.

• The case examines the contrasting strategies adopted by FedEx and UPS in their efforts to establish presence in China. FedEx followed an aggressive, high risk, more investments approach to expand its services network in China which enabled the company to capture higher market share.

On the contrary, till the late 1990s, UPS followed a conservative, low risk, low investment approach to establish its presence in China.

Q 2.) DHL won the Express and Mail Operator of the year’ awards along with the IT Innovation ‘ Award at the Asia logistics award in 2003. Examine the role played by the company’s innovative logistics services in the success of DHL in China. Compare DHL’s innovative strategies with those of other foreign players in the Chinese markets.

DHL Express Product Offering (Innovative services)

• Worldwide Document Express (DOX)• Worldwide Package Express (WPX)• Import Express (IMP)• Jumbo Junior & Jumbo Box• Express Pallet• Global Mail• Fast Forward*

E-Com Tools for Customer Shipment Visibility

DHL Connect

Web-enabled shipping software programme that can handle all your shipment processing needs

DHL Easyship

Ultimate shipment management system with EDI capabilty

DHL Express SMS

Text DHL<space><awb#> to 2333 for GLOBE or 288 for SMART subscribers and get real-time shipment status

DHL Web Shipping

On-line shipping and tracking tool that helps you prepare your shipments and book a pick-up in a few simple steps

Innovative strategies from the Competitors

Fed-Ex UPS TNT

100% End-to-End Shipment Visibility

Shipment and Shipment Status

Information

GroundOps

Gateway HUB GatewayGround

Ops

Shipper

ProactiveTracking

Checkpoints

Overall performanceand trend measurement

Shipment Information

Shipment StatusQuery

Consignee

TransitTimes

Q 3.) Despite intense competition in the Chinese logistics market, DHL emerged as the No.1 foreign logistics services in China. Analyze the unique features of DHL’s expansion strategy. Do you think it would be able to sustain its success in the light of future challenges.

DHL Investments in Asia Pacific

US$ 200m Will be invested into

DHL-Sinotrans infrastructure over the next 5 years

Japan US$ 125m 26 Service centers

China US$ 9m Gateways Pudong Gateway Beijing airport Service centers

Singapore US$ 10m Southeast Asia Hub Service centers

South Korea US$ 15m Bonded warehouse at

New International Airport Service centers

Taiwan US$ 30m Gateway movement 4 Service centers

US$ 58m 5% stake of

Sinotrans

... up to a total of US$ 1.1 B

US$ 400m joint venture with Cathay

Pacific and Air Hong Kong

US$ 100m DHL’s Central Asian Hub

Hong Kong US$ 82m Express Logistics center Service centers

US$ 52m Asia Pacific Information

Services (APIS) Center

Malaysia US$ 6m Service centers

Philippines US$ 30m Stations Gateway Vehicles

• In 2001, GDP growth was 7.3%• China's WTO membership, restrictions reduced• In 2000-01, company established its branch in Zhengzhou, Chongquing, Nantong, Lanzhou & Suzhou.• Developed service network covering 318 cities by Jan 2204When Fedex and UPS launched its own airlines, DHL

continued to to stick to its existing strategy of using commercial airlines instead launching its own as such alliances ensured faster delivery of goods. D-S believed that on ground service were more important thaan airline services for express delivery.

• DHL welcomed competition

• Gateways': till 2001 co. had gateways in Beijing, Shanghai, Guangzhou & Shenzen• In 2001,Pudongairportgateway was opened inShanghai. Maximum shipment processing caopacitry was increased

from 3000 to 10000 pieces per hour.• Again in Oct 2001, D-S invested US $ 1.2 mn to construct new Beijing international

gateway . Max capacity for tonnage handling was hiked from 7-20 tonnes/hr. Capacity for tonnage handling from 3500-5000 pieces/hour conmpared tp previous gateway.

• In mid 2003, air express market was growing rapidly in China’s Yangtze river delta. So to keep pace, D-S used 182 scheduled commercial flights in Shanghai each week. Also in June, 2003, co. launched an overnight express service “Asia Overnight” between Shanghai & Hong Kong . Another alliance was with Hong Kong based airline called ‘Dragonir’

• In Oct, 2002, DHL acquired a 30% stake in Air Hong Kong, remaining being held by Cathay Pacific.

• In Feb 2003, To strengthen the relation ship, DHL acquired a 5% stake in Sanitrons for US $ 57 million.

• Between Sep-Dec 2003, DHL opened 11 new branches in China, taking the no. to 50.

• In oct 2003, DHL announced a US $ 200 mn 5 year ‘China Expansion Programme’

• May 2004, DHL total investment in China was US $ 215 million with a market share of 40% in Chinas Express delivery business. Employees – 4700 in 225 locations, 4 gateways, 1100 vehicles serving 318 cities in China.

Future Prospects in China

• DHL, UPS, FedEx, and TNT, the largest express deliverers around the globe, will be able to enjoy a mechanism for regular communication with the Chinese government.