TNT looks to make inroads

The company believes its focus on road-based services will pay off

SHANGHAI - TNT Express NV, the Netherlands-based international express delivery company, is vying for a larger share of China's road delivery market, a top executive from the company told China Daily on Thursday.

Although the road delivery market in China is not as mature as those of Europe or the United States, the spending power of Chinese consumers will boost demand, said Marie-Christine Lombard, chief executive officer of TNT Express.

Lombard said China's delivery market will reach the same size of the current US market by 2020, valued at 60 billion euros ($85.77 billion).

"The express market is usually 2 to 2.5 times GDP growth of the country," Lombard said.

She added that TNT sees opportunities in the Chinese market because many of the logistics companies providing "less-than-truckload" services don't pay enough attention to prompt delivery times, and customers are demanding a higher quality of service.

According to the CEO, TNT's day-definite delivery service - a guarantee to deliver a package by a certain date - reaches 1,128 destinations in more than 140 large and medium-cities across China.

There are other companies doing a similar thing on a limited scale, but TNT is doing it everywhere in China according to Lombard.

The day-definite service has registered high double-digit growth since it was introduced in 2009, according to Lombard. Therefore, TNT believes the market outlook is bright and the service has been reshaping the market.

The company's standard road delivery service in China will be day-definite. It will take some time, but TNT will keep contributing and recording double-digit growth in the business every year, said she.

Lombard declined to comment on the much-discussed departure of DHL Express Ltd from China's domestic express market after the sale of its local joint ventures. However, she noted that DHL delivers by air, which is expensive compared with TNT's focus on day-definite delivery by road.

"China's logistics market is dividing into two separate markets: one is dominated by domestic delivery companies, which usually have no international networks or well-known brands, but compete with each other in a cut-throat price war; the other is controlled by the major four foreign companies who focus on high-end international express business," said Chen Zhuo, an industrial analyst from Huachuang Securities.

According to Chen, China's logistics market will grow by 21 percent year-on-year in the next five years.

Wendy Li, corporate communication manager with DHL told China Daily that DHL's decision to sell its domestic business will not affect the company's future development in the country as it will continue to serve existing international customers. "DHL's business in China is steady with a double-digit rate of growth over the years, and will stay with this growth trend," she said.

Being the largest provider of delivery services in Europe, TNT Express accounted for 33 percent of the 1.2-billion-euro express business between China and Europe in 2010. Formerly part of TNT Group, TNT Express listed on the Amsterdam Stock Exchange in May 2011.

China Daily

(China Daily 07/08/2011 page15)