Largely in response to the pull from their American client base, mid-sized US freight forwarders have been expanding aggressively in China. Typically, this has drawn them to Shanghai first, but as their customers move inland, regional and domestic activities in other locations are on the rise.

IJS Global is a relative newcomer to China, due to its fairly recent inception. The company was launched in 2005, following the takeover of US forwarder Inter-Jet Systems by a US-based private equity fund. Led by a group of managers who mostly hail from the erstwhile Air Express International, the company's declared goal is to become a logistics firm with annual revenues of around US$500 million and a global footprint, employing 1,200-1,500 people.

Over the past two years IJS has opened offices around the world at a blistering pace. By mid-January, it had offices in 36 locations, plus agency partnerships in a host of markets. According to chairman and chief executive officer Giorgio Laccona, the expansion is now largely completed, with just a few more additions to follow this year, primarily in Latin America, France and China.

The forwarder opened its first China office in Shanghai and subsequently added Shenzhen. "We used to cover the area from Hong Kong, but we saw good opportunities with people we knew in Shenzhen. Now you can fly cargo from Shenzhen, you can truck it to Hong Kong or to Guangzhou," Laccona said.

IJS is currently talking with an undisclosed Chinese company about a possible tie-in, which would give the US-based outfit a presence in a host of Chinese cities. "If this does not work out, we can expand into another four facilities with our Class A licence," Laccona said. In that case, the most likely targets would be Beijing, Qingdao, Guangzhou and Ningbo, he added.

Many mid-sized US forwarders are less proactive in the choice of locations in China. Many of them follow their customers, who are themselves setting up shop in China.

"Our emphasis has been on specific sales to American multinationals. Our American clients have pushed us to those locations," said Chris Coppersmith, president and chief executive officer of California-based Target Logistics Services. Target currently has nine locations in China and has had its own licence in the country since 1997.

Likewise, BDP International's push into China was driven by the forwarder's US clients that were themselves building facilities in the country. "We put our offices where our customers are - their decision making offices, not necessarily their manufacturing locations," said Ken Wensel, chief sales officer of the Philadelphia-based forwarder, which entered China in 1996. Today it operates in seven cities in China.

Like its customers, BDP initially focused fully on exports out of China, but gradually the country's domestic market has grown in importance for both, opening up new opportunities for the logistics firm. At the moment, this is still a relatively modest portion of BDP's activities, but Wensel sees strong opportunities for growth in the domestic market. "About 90 percent of our business in China is still international, but the 10 percent on the domestic side has a lot more upside potential than the 90 percent," he said.

Target had a strong presence in Southeast Asia prior to entering China, and the relationships it had with US companies that were operating in the region proved the catalyst for much its Chinese expansion. As a result, intra-regional activities have played a strong role in its business alongside exports to North America, Coppersmith said. "For us it's more China-Asia than China-US," he added.

Another determining factor in the company's expansion has been its focus on special niches, first and foremost the aviation industry. This enabled Target to establish a foothold in Shenyang courtesy of an agreement with Shenyang Aviation Group. "We're now starting with Xian Aviation, and then with Chengdu Aviation," Coppersmith said.

BDP's first China branch opened in Shanghai, followed by a representative office in Beijing, as it was not permitted to open its own office in the capital at the time, Wensel recalled. He said that the red tape has shrunk significantly in the meantime.

"The regulations are not obstacles any more, they're hurdles now. They used to be showstoppers," he said. At the moment, he sees the biggest challenge in China's trucking infrastructure, notably the lack of national operators.

Emphasising its non-asset-based approach, BDP is working on developing strong relationships with local transportation and warehousing companies. Increasingly customers are unwilling to use different systems to deal with supply chain issues in various countries and are asking for standardised processes, Wensel said.

"I look at us building a confederation of companies that want to be involved in certain sectors, that have proven expertise in certain segments but lack the infrastructure and experience how to work for a multinational company. We will connect these companies and make them part of our value proposition," he said.