The Ministry of Transport will seek to expand China’s express courier sector by 150% by 2015, turning the service into a CNY143 billion business. Under the government’s latest five-year-plan, the Ministry will nurture at least five large Chinese express courier companies, each with revenue of more than CNY1 billion by 2015, in the hopes of positioning them against global leaders such as FedEx and UPS. The use of express courier services is increasingly vital with the explosive growth of e-commerce, the Ministry said in a statement on its website. KPMG also said a major factor in the recent domestic growth of logistics was e-commerce. “This business is set to continue growing rapidly,” it said in a report. Morgan Stanley forecasts China’s e-commerce revenue will grow 75% from 2010 to 2013. “DHL and FedEx have been unable to conquer the local market,” Anthony Wong, a former President of the Hong Kong Logistics Association said. Establishing large express courier companies would make it easier for Beijing to collect taxes from them, as opposed to the plethora of small couriers that tend to fly under the radar, Wong added. By 2015, the Ministry of Transport wants express courier services to cover 98% of China’s municipalities and provincial capitals, with 95% availability of 24-hour delivery services within the same city.

FedEx Express has expanded its airport facility in Hong Kong by more than a third to improve its parcel-handling efficiency, ignoring the downturn in the air cargo industry. The company installed new equipment and storage space, which would allow it to handle 200 tons of cargo in just under 45 minutes, compared with two to three hours in the past, said Anthony Leung, Managing Director of FedEx Hong Kong and Macao. The ground handling facility of FedEx at the Asia Airfreight Terminal in Chek Lap Kok has been expanded 37% to 4,695 square meters. The number of trucking docks has been doubled to 14 and those with direct ramp access also doubled to four. An additional 748 sq m of caster decks have been added to facilitate faster movement of freight shipments. FedEx has also increased Hong Kong staffing levels by 5%. The expansion in facilities comes as cargo volumes are dwindling. Hong Kong International Airport saw its cargo tonnage drop 4.6% year on year in the first 11 months of last year. Leung said the express cargo business would be less adversely affected by the European debt crisis than general air cargo. This is because importers tend to place ad hoc orders in small quantities rather than in bulk when they need to test customer response on products before placing big orders for them.

Night curfews and a shortage of take-off and landing slots are hampering the development of courier air cargo operations in China, express freight airlines have complained. Carriers said the problem is severe in western provinces where the infrastructure for night-time cargo operations is lacking. Li Dongqi, President of SF Airlines, said a midnight-to-6am curfew “seriously lowers operating efficiencies for firms like us. Business volumes are very low – time slots are the constraining factor”. SF Airlines, the air carrier subsidiary of Shenzhen-based courier company SF Express, has grown significantly in the past two years. The carrier handled about 210,000 tons of express shipments so far this year using a fleet of 15 chartered freighters including 34-ton-capacity Boeing 757s and Boeing 737s, capable of carrying 20 tons. The carrier also has a strategic partnership with China Cargo Airlines. Li said the airline wanted to expand its air express operations to Hong Kong and Taiwan following the launch of a Singapore and Malaysian operation, although it was “not ready” for “trans-ocean business”. Li’s views were echoed by other express cargo operators, including Su Guoxin, Chief Executive of Donghai Airlines and Gao Pei, Executive Vice President of China Cargo Airlines. Gao said the curfew and a lack of stable freight volumes constrained expansion. Shan Daxin, Vice President of Marketing for Yangtze River Express Airlines, said these issues had developed because of rapid growth in airfreight demand as electronics and other high-tech manufacturers moved into western cities such as Chongqing and Chengdu. Gao of China Cargo Airlines added that domestic air cargo demand had “increased significantly” so far this year and China Cargo controlled about 30% of the total airfreight volume in Shanghai. This is despite just 1.1% growth in overall domestic air cargo volumes in the first nine months, according to figures from the Civil Aviation Administration of China (CAAC), the South China Morning Post reports.

China Postal Airlines, the express courier division of China Post, has confirmed plans for an almost sixfold increase in its air-freighter fleet. General Manager Li Yufeng said the carrier aims to expand its current fleet of 16 cargo aircraft freighters to 46 aircraft by 2014 and 90 by 2019. The airline, which was set up as a 51-49 joint venture between the Postal Bureau and China Southern Airlines, provides freighter capacity for China Courier Service’s express mail service (EMS). Li said the expansion was needed to cope with the growth in volume of EMS business which was expanding by around 24% a year. He added that the airline’s EMS freight volumes were expected to top 400,000 tons by 2014 and 980,000 tons by 2019. To meet this increase the airline planned to have 52 bases and Boeing 737, 757 and 767 aircraft by the end of the 13th Five Year Plan. The airline’s existing fleet comprises 16 Boeing 737 freighters which can carry around 20 tons and were all converted from passenger configurations. Aviation industry insiders said the airline could also face a challenge securing enough aircraft, including second-hand Boeing 757s and 767s for conversion from passenger planes to freighters. Joseph Reinherz, Managing Director of M&B Conversions, an offshoot of Israel’s Bedek Aviation Group, which focuses on modifying Boeing 767s to freighters, said the supply of 767s for conversion was tight. But he added this would change with the arrival of the Boeing 787 Dreamliner and as airlines retired older aircraft. Reinherz said his firm was in talks with China Postal Airlines and hoped to secure a contract “very soon” to convert 767s, the South China Morning Post reports.

With airlines being challenged to be more green, express carrier DHL is accelerating its carbon offset program by securing its first worldwide contract from a bank. The carbon-neutral initiative, DHL Gogreen Carbon Neutral Services, is designed to offer an option for shippers to be more environmentally friendly. Gogreen shipments are transported the same way as others, but the carbon emissions they produce are offset. Standard Chartered Bank is the first bank to adopt the program globally and has agreed to make 95% of its international courier services carbon neutral. Several major banks had previously joined the Gogreen program on a regional basis. Standard Chartered branches in Hong Kong, China, Germany, India and Indonesia will be among the first to implement the program. Approximately, 2,000 tons of carbon emissions are expected to be offset each year after the program is implemented by the majority of the bank’s global network. “Energy efficiency is one of the most significant ecological challenges that we face in transportation,” said Jerry Hsu, Chief Executive of DHL Express Asia-Pacific.