Dive Brief:
- FedEx expanded a service for e-commerce merchants in China, allowing them to reach the U.S. and Europe and capitalize on cross-border shipping growth, the company announced last week.
- FedEx International Connect Plus was already available for merchants in mainland China to send shipments within Asia-Pacific markets before its expansion. The service typically delivers in two to three business days and is geared toward lightweight and less-urgent packages.
- “With the rapid growth of cross-border e-commerce in China, an increasing number of local e-tailers are eager to expand their business globally," said Poh-Yian Koh, SVP of FedEx and president of FedEx China, in a news release. "Mature markets like the U.S. and Europe remain the primary trading regions for their exports."
Dive Insight:
FedEx is bolstering its shipping options out of China as online shoppers clamor for goods made in the country. The country's online retail sales grew nearly 10% year over year in the first half of 2024, a demand boom that is squeezing air freight capacity and driving up shipping rates.
Demand for air cargo services from Asia has exceeded FedEx's expectations, and the company anticipates continued momentum in the space, EVP and Chief Customer Officer Brie Carere said on a June earnings call.
"We expect year-over-year growth to be driven by e-commerce and low inventory levels," Carere said.
Rival UPS is also reaping the benefits of growing cross-border e-commerce activity from Asia. Brian Dykes, UPS CFO, noted during a July earnings call that export volume on the China-to-U.S. trade lane increased more than 20% in Q2.
"This is the third consecutive quarter of volume growth on this lane, which is our most profitable lane," Dykes said.
In a competitive environment for cross-border e-commerce volume, the company is positioning FedEx International Connect Plus as a cost-effective shipping option for merchants. FedEx listed a simple rate structure and lack of a residential surcharge and integration among the service's highlights on its website.
