Global express giant TNT launched a 110 million yuan (US$16 million) road freight distribution hub in Wuhan, Hubei Province, yesterday to tap into China's growing domestic market.

The Wuhan hub, covering an area of 46,620 square meters, is the first of the company's 10 major regional road hubs to be built in the next five years at a cost of more than 1 billion yuan.

TNT's wholly owned subsidiary Hoau will operate the hub, which is expected to reduce operation costs by up to 10 percent and reduce delivery time on key routes, spanning Fujian, Jiangxi, Hunan, Sichuan and Chongqing, by up to two days.

"Wuhan is a key position for TNT to strengthen business in west China, and the strategy keeps pace with the central government's plan to boost domestic demand by developing middle and west regions," said Hoau Group CEO Edward Xu.

He was confident annual revenue in Wuhan will exceed 400 million yuan with the launch of the hub.

"Logistics costs account for 18 percent in China, while in Europe and the United States, the costs account for only 8 to 10 percent. So the hubs can reduce operational costs, stabilize supply chains and increase efficiency," Xu said.

The Wuhan Dongxihu Bonded Logistics Center, where the new hub is based, is the fourth bonded logistic center in China after Suzhou, Beijing and Nanjing.

Another nine mega hubs will be located in key locations across the country, including Yangtze River Delta, Pearl River Delta and Xi'an, capital of Shaanxi Province.

TNT now runs 56 domestic operation hubs that serve 1,260 depots in more than 500 cities in China, which will work with the road distribution hubs to improve operation capacity and efficiency.

(Shanghai Daily June 19, 2009)