This spring, however, the San Jose, Calif.-based company began to shift the Hong Kong-bound cargo to the highway. Although that increased transit times by about eight hours, it also produced significant cost savings, said Bob Scribner, director of global logistics and trade compliance.

The move highlights the dramatic inland infrastructure improvements China has made in recent years, and will continue to make as its massive $585 billion economic stimulus program feeds the interior’s Third World-rate roads.

As trucking performance has improved, interest in surface services has increased. “Trucking from the Pearl River Delta and beyond to Hong Kong is growing, not only in terms of volume, but also in going farther afield where the cargo is coming from,” said Olaf Tauschke, senior vice president for Asia-Pacific at logistics provider Agility.

Fairchild began to look more closely at trucking when air cargo rates soared, capped by last year’s stratospheric rise in fuel surcharges.

Providers such as express operator

“DEMAND IN INTRA-ASIA IS
QUITE STRONG.”

“Trucking has improved dramatically in China,” Scribner said. “We looked at this t wo years ago and decided it wasn’t ready then.”

Five years ago, he said, it took 2 1/2 to 4 1/2 hours to get from Suzhou to Shanghai by truck. Now it’s a 90-minute trip.

Other companies, looking to take advantage of China’s better long-haul trucking services, also are pushing the range of their trucking activities. Hong Kong Air Cargo Terminals, which handles more than 70 percent of Hong Kong International Airport’s nearly 4 million metric tons of cargo annually, has been feeding traffic to its warehouse through a wholly owned trucking subsidiary that runs regular service to several points in China.

Most of those points are in the Pearl River Delta — close to Hong Kong — but the company increasingly is looking farther inland.

TNT responded quickly to the demand. “When the fuel price was so high, every one of our large customers had a closer look at our Asia road network,” said Onno Boots, TNT’s regional managing director for Asia. “We’ve had phenomenal success. Road is much more affordable than air, but a lot faster than sea.”

It’s not just the transport within China that is affected. TNT over the past two years has been linking its national trucking networks in China and Southeast Asia. Interest received a further boost when political protests shut down Bangkok’s international airport for a week last November, Boots said. With air freight paralyzed, demand jumped for trucking companies operating between Bangkok and neighboring countries.

“We are now building our own market into this space,” Boots said.

Berlin-based logistics provider DB Schen-ker has seen rising demand for its trucking services between China and its Southeast Asian neighbors. “It started from a small base, so volumes are still modest, but we are seeing good growth rates,” said Steve Dearnley, chief executive for the Asia Pacific region.

One factor that may accelerate development of road infrastructure and trucking services is the relative strength of intra-Asian traffic compared to the decline in long-haul sectors to North America and Europe.

Logistics companies see a growing emphasis on intraregional trade and are developing business models to meet demand. Last September, Agility acquired Baisui Logistics, a Shanghai-based operator whose strengths are in the domestic Chinese market.

“Demand in intra-Asia is quite strong,” Tauschke said.

Crossing borders, while not as restrictive as in the past, still can be a trying hurdle to clear. “Border controls can be frustrating, Dearnley said. “It’s working, but it’s not a well-oiled machine. There have been improvements. For example, you no longer have to transload from one truck to another. But it’s still a long way to go.”

Prior to embracing long-haul trucking in China, Fairchild implemented a trucking program bet ween Thailand and Malaysia. “It’s trickier than in China. Their cross-border cooperation is not very good, but it has improved,” Scribner said.

Security is another concern. When Fairchild shifted to trucking between Thailand and Malaysia, it picked a company that had its origins in secure transportation, moving chiefly payroll and bank transfer traffic.

It now uses dedicated, bonded trucks,