Delivery Giants Compete for Asian Market

What do these three have in common: the original film “Old Boy” directed by Park Chan-wook, the Chinese giant panda, and the fossil of the largest amphibian ever?

They were all delivered from Asia by Fedex, an international express delivery service provider.

The attention of the top four international delivery giants, DHL, Fedex, TNT and UPS, is focused on the Asian market lately. They understand that the 30 trillion won market which grows an average of 10% annually will decide their fate.

In Korea, one of the major logistics hubs in northeast Asia, these four companies recorded a market share of 66.7% last year. DHL led the pack in terms of market share, beating the Korean Postal Service of the Ministry of Information and Communication.

Win the Asian Market-

TNT signed a memorandum of understanding (MOU) with the Japanese Postal Service on November 2 to establish a joint-venture company within this year.

It plans to get a head start in the Asian market by cooperating with the Japanese Postal Service which is set to expand its operations into the overseas market ahead of the privatization of the Japanese postal service in 2007. The company, which focuses on the special delivery of biotechnology products, has been actively providing clinical trial sample delivery services in Korea since 2003.

DHL, which runs a total of six logistics hubs in Asia, will invest $20 million or 20 billion won next year to construct a 6,800-pyeong logistics in Incheon International Airport. It also has a plan to double the size of its existing 5,500-pyeong Hong Kong logistics hub by 2007.

UPS, which operates as many as 600 cargo planes, is strengthening its Chinese network to provide better service for Korean companies with the high demand for delivery to China.

It has been operating a Qingdao-Incheon flight five times a week since July this year. Furthermore, it has decided to establish a logistics hub in Pudong International Airport in 2007.

As foreign express delivery companies are advancing into the Chinese market, the Chinese postal service’s market share has plunged to the 40% level, down from 95% in 1987.

Customized Service for Korean Clients-

Fedex hosted an exceptional event in a plaza in front of the Seoul Finance Center in Mugyo-dong, Jung-gu, Seoul on November 1.

In celebration of the official merger of two companies, Fedex and Kinko’s, employees in Korean traditional costumes staged a traditional wedding ceremony. Twenty-one branches of Kinko’s, an office and print service company, were renamed “Fedex and Kinko’s” in April, after Fedex acquired the company last year.

Han Song-I (29), a deputy manager of Fedex Korea, said, “The merger enabled us to provide the one-stop service, offering customers office and print solutions as well as delivery service at one place. We see a rapid increase in demand among ordinary citizens, say, for application documents delivery for overseas study, as well as existing business clients.”

DHL Korea has improved customers’ accessibility to its service by setting up counters in downtown areas including subway stations, 16 universities, and department stores, in April. The company also offers a 20-30 % discount on application document delivery for overseas study.

TNT Korea launched an international express delivery service at convenience stores such as GS25 last year.

Furthermore, the companies are tirelessly developing localization strategies, such as using Korean invoices and offering package-tracking services by cell phone.

They are also interested in cultural marketing to raise their brand awareness among customers.

TNT Korea sponsored the “Asiana Short Film Festival” this year, and the World Press Photo Exhibition last year.

DHL Korea sponsored the TV drama “Lovers in Prague” in addition to delivering films for three domestic international film festivals such as the Busan, Bucheon and Jeonju international film festivals.

Sun-Mi Kim kimsunmi@donga.com