Express giants roll out cheaper, slower services on mainland

THE world express giants, including FedEx and UPS, hard hit by downturn, are changing their strategy by lowering both the delivery speed and price to save cost, Logistics Week reports.

FedEx has announced that its International Economy Service coverage will be expanded from the initial 13 Asian markets to more than 90 countries and regions around the world. Meanwhile, its International Economy Freight would be available in 50 countries and regions. Both the services are targeting at non-urgent shipments and are one or two days slower than its International Priority Service for urgent parcels, but also with a much cheaper price.

First launched in January last year, Chen Jialiang, president of FedEx China said the International Economy Service expansion of its service portfolio aimed to make better use of the capacity of its freighter to save operation cost.

Now the express giant is expanding the service as global trade continues to shrink, and its new Asian hub at the Guangzhou Airport hasn't brought satisfactory results as expected after commencement of operation in February.

Another leader of the industry, UPS, has also announced plan to launch a series of new services focussed on cost saving more than speed of delivery. The new service will be half the price of urgent shipments, but take three to five days to deliver.

UPS has posted a report of a survey on 150 Chinese mainland small and medium enterprises, showing that 64 per cent of the companies are seeking new sources of income, 59 per cent are planning for cost reduction and 55 per cent are to tighten up their cash flow.

One freight forwarder in Shenzhen said that 70 to 80 per cent that used next-day service have since scaled back on urgent shipments as delivery times prolonged to 12 hours become more widely acceptable.

Twenty to 30 per cent of customers even shifted directly from air to road or ocean shipping, he added.