FedEx plans to launch next-business day domestic delivery services in China from June this year even though it has been in the Chinese market  for more than twenty years. Earlier, FedEx only had international express services in China. Its competitors DHL and UPS already offer domestic services. DHL launched its domestic services in China in 2004 and UPS in 2005.

FedEx’s President feels that they are in the ideal position to take advantage of China’s transition to a consumer economy through its rapidly growing middle class.  The business in China is being viewed more as a long term investment and the company is confident about the market because about 90% of its customers in China and abroad had been feeling the need for domestic services.

The regional hub in HangZhou, East China’s Zhejiang Province has already been set up by FedEx to make its domestic service operational. Hangzhou is ideally located in terms of air traffic capacity, reasonable operating costs, centrally located, good weather conditions, and a potential customer base. These are critical factors when it comes to setting up a logistics center.

The regional hub at the Xiaoshan International Airport has the capacity to initially sort up to 9,000 packages per hour.

An airport official says that FedEx and Xiaoshan International Airport have a three year agreement contract. There will be two night circular routes from Hangzhou. Roughly 200 cities will be covered by trucks throughout the country. The transport will be taken care of by domestic carrier Okay Airways with their three Boeing 737 freighters.