United Parcel Service (UPS), the world’s largest package delivery company by revenue, is betting on China’s growing demand for healthcare products after opening a specialist facility in Hangzhou, capital of Zhejiang province, to handle shipments of medical products. In 2011, China overtook Germany to become the third-largest pharmaceutical market, with an estimated value of USD64 billion, and it is expected to overtake Japan to become the second-largest market in 2015. China was recently voted the market with the most expansion opportunities by healthcare industry executives surveyed for UPS’s fifth annual “Pain in the Supply Chain” study, a global survey of issues and opportunities in the industry. The new Hangzhou facility consists of 22,000 square meters of storage space and is designed to meet the demands of specific storage of medical devices, biologicals and pharmaceuticals, and distribution needs of pharmaceutical companies, said Jim Barber, UPS’ International President. Merck Sharp and Dohme (MSD) is the facility’s first partner company. Since 2002, UPS has invested USD1 billion to increase market share in China. “China’s healthcare logistics distribution model will change from internal operation to outsourcing services,” Barber said. “With many healthcare companies demanding rigorous supply chain solutions in China, we are seeing increasing opportunities,” added Richard Loi, UPS President in China. UPS opened its first Asia healthcare facility in Singapore in 2011, and has followed that with the opening of three additional facilities in Hangzhou, Shanghai and in Sydney, Australia. Its global healthcare network is made up of 41 dedicated facilities and 683 aircraft worldwide. UPS has so far been granted 19 licenses by the State Post Bureau of China to operate domestic courier services in cities such as Shenzhen, Guangzhou and Shanghai, the China Daily reports.

Deutsche Post DHL, one of the first foreign courier companies to enter China, will tailor its services for the country’s booming western regions, according to William Meahl, DHL’s Chief Commercial Officer. A growing number of enterprises are relocating to these regions to better manage costs and increase efficiency. The company will provide a range of solutions, including new warehouse management systems, to help manufacturers rein in logistics spending following the huge urbanization drive in China’s inland areas. “West China is where people move their operations for lower labor and property costs. But if logistics doesn’t move along with manufacturing, you cannot move up the value chain,” Meahl told China Daily on the sidelines of DHL’s annual global technology conference in Shanghai. The company will strengthen its ability to connect clients in western China to the rest of the world. Asia accounted for 20% of DHL’s global sales last year, with China claiming half of this share. Meahl said he expects the Asian percentage to rise to one-third in the next five years, with China continuing to take the lead. He identified the high-tech sector as one of the key growth areas of DHL’s China business portfolio. The changing nature of technology will amplify the role of logistics in having a competitive edge, Meahl said. “From a logistics point of view, the prevalence of mobile devices translates into shrinking size of goods, meaning that each shipment has to handle many more units of goods than before,” Meahl said. DHL has developed a range of solutions to help address such challenges, including direct distribution services like Door-to-More and Break Bulk Express, and options to reinforce high-quality customer service offerings, such as Technical Service. Up to 20% of DHL’s annual spending goes to developing IT solutions. On Alibaba Group setting up a national logistics network, Meahl said it means more of a partnership, rather than competition. DHL invested USD175 million last year in Shanghai to launch its biggest express hub in Asia, the China Daily reports.

DHL Global Forwarding introduced a second multimodal overland service connecting Asia and
Europe. A train will depart every Friday from Chengdu to Europe, passing through western China and Kazakhstan to DHL’s intermodal hub in Malaszewicze, Poland. The new weekly service comes as an addition to DHL’s daily service, which departs from Shanghai and runs along the trans-Siberian North Corridor. It will reduce the overall Asia-Europe transport time by up to eight days, further cutting costs and CO2 emissions.

China’s express delivery market has grown five-fold in the past five years, according to the State Post Bureau. The number of units delivered in April surged by 64.1% compared to last year, with revenue reaching CNY10.9 billion, an increase of 41%. The first quarter of this year saw 1.71 billion units of post delivered, up 64.3% year-on-year. About 5.7 billion units were delivered through couriers in 2012, with a market value of CNY106 billion. Private companies claimed three-fourths of the market share and 61.9% in terms of sales. Around 800,000 couriers were employed.

International delivery companies are taking the lead in cutting roadside emissions in Hong Kong and hope their local counterparts will follow suit. FedEx Express commissioned 10 electric vehicles in Hong Kong in March, the company’s first zero-emission fleet in Asia as it attempts to reduce fuel consumption by 4% in the city. The 10 electric vehicles have made the 254-strong delivery truck fleet greener. Vehicles are the biggest source of air pollution in the city, with 67% of carbon monoxide coming from road transport and 19% of respirable suspended particulates emitted by cars, according to the Environmental Protection Department. “The 10 Ford Transit vans, made by Smith Electric Vehicles, will be deployed in Chai Wan, Kennedy Town, Tsuen Wan and Sha Tin,” said Anthony Leung, FedEx Express’s Managing Director for Hong Kong and Macao. FedEx has a fleet of 250 electric cars and 360 hybrid cars globally, which play a key role in pursuing its goal of saving more than 75 million liters of fuel every year. The company has just tightened its 2020 fuel consumption target to a 30% cut from what it used in 2005. UPS, which introduced its first hybrid-electric vehicle in Hong Kong in 2011, said it is going to add more hybrid vans later this year. Its hybrid car is 35% more fuel efficient than a traditional car. DHL Express introduced six bicycles last month that are capable of charging the hand-held mobile scanners used by DHL couriers, and it commissioned one hybrid truck in Hong Kong in 2011. Its fuel consumption is 24% lower than a normal truck. The company said it is in the process of evaluating other electric vehicles.