The booming Chinese courier, express and parcel (CEP) sector will outgrow Europe’s largest market, Germany, within five years if it maintains its current dynamic growth rates.

The world’s four leading express players, DHL, FedEx, TNT and UPS, look set to win significant market share from Chinese operators by expanding their domestic services. In response, Chinese players are trying to strengthen their financial basis and enhance their services. Those are the key findings of a new “CEP Market Fact Sheet China” from CEP-Research.

The Chinese CEP market has soared with average annual growth rates of about 25% in recent years, nearly quadrupling in value from about E1 billion in 2000 to over E 3.8 billion in 2006, according to the Hamburg-based market research organization. Demand has been driven by economic liberalization, a surge in foreign trade and the emergence of a strong domestic consumer market.

Looking ahead, growth rates in the 25–30% range are expected for the next few years, taking the market to more than E12.5 billion in 2011, CEP-Research forecasts. This would make China bigger than Germany, France and UK, the three largest express and parcel markets in Europe.

“These figures demonstrate what a key role China will play in the worldwide express and parcels industry in the future. CEP companies in Europe and overseas who do not yet have a clear China strategy risk missing out on excellent growth opportunities,” said Mark Winkelmann, MD of consultancy ITA Logistics, the CEP-Research parent company.

The domestic market remains highly fragmented, with a clear leader (China Post), several medium-sized nationwide competitors and a multitude of regional or local operators. The highly competitive international market is essentially divided up between DHL-Sinotrans, FedEx, China Post, UPS and TNT.

The “Big Four” integrators are all investing strongly in China through acquisitions, network infrastructure (including new regional air hubs) and new services at present. “The domestic market is much bigger than the international market and that is where the action will be during the next few years,” Winkelmann commented.

“The integrators are investing heavily in domestic services and we expect them to continue acquiring companies to build up their market share. Chinese companies now face the challenge of developing strategies to defend their market positions.”

The 24-page report can be ordered online at www.cep-research.com