Date
16 October 2017

Deppon a long way from being China’s FedEx

Amid thriving e-commerce activities and a near 8 percent economic growth, the courier services industry has been on a roll in China. Like any other booming business in the country, the sector quickly attracted lots of new players. Among the more serious contenders is China Deppon Logistics.

Deppon has big dreams for its courier operations, aiming to challenge the long-established players.

The firm has already become China’s biggest domestic road freight company in terms of revenue, according to Yicai.com. As of the end of last month, Deppon had over 4,200 outlets in China. Its service network covers hundreds of cities and regions across the nation with more than 7200 freight vehicles.

Deppon rolled out its “economic express” services this month. Aiming to be a one-stop logistics and courier operation, the firm plans to leverage the resources of its already mature business, which focuses on the so-called less-than-truckload (LTL) logistics.

LTL players provide road freight service for larger size parcels like furniture although the goods may not fill up the entire truck. These firms won’t have regular truck departure times, so senders have to accept that condition as a tradeoff between cost and time.

Xu Yong, chief consultant of China Express and Logistics Consulting, told Yicai: “The logistics business is going to be really competitive. Small to mid-sized companies will have to provide specialized services, while leaders have to transform into a comprehensive logistics service providers, just like FedEx and UPS overseas.”

Making a leap from an LTL operator to a top-notch courier service player, however, will require plenty of investment. Although logistics and courier operation are similar in nature, generating synergy by combining the two might not be not as easy as it looks.

LTL parcel receivers now have to collect the items themselves at Deppon’s terminals and parcel distribution centers. A courier operation providing door-to-door delivery service needs much more intensive labor input.

One should also bear in mind that Deppon is still relying on its road freight team for delivering parcels, while other big domestic couriers like SF Express, Shentong Express and YTO Express all have their own aircraft for cross-region deliveries.

Given this situation, Deppon still has a long way to go before it can become anything close to being the FedEx of China.

– Contact the writer at [email protected]

RC

 

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