Archive for December, 2006

China external logistics reached a total value of RMB 48 trillion in 2005 with a year-on-year growth of 25.2%, which was a little lower than the previous year but it sill an astound increase. Industrial product logistics developed fastest; agricultural product logistics increased slowest.

• The total value of China external logistics amounted to RMB 26.8 trillion in the first half of 2006, rising 15.3% compared to the 1st half of 2005, but its growth rate declined by 1%, which was mainly caused by decreasing growth rate of industrial product logistics.
• The total value of industrial product logistics was RMB 23.4 trillion, up 15.6% compared to the 1st half of 2005, but its growth rate declined by 1.2%.
• The total value of import logistics was RMB 2.95 trillion, up 14.2% compared to the 1st half of 2005, and its growth rate increased by 0.2%.
• The total value of agricultural product logistics reached RMB 461.5 billion, growing 5.1% compared to the 1st half of 2005.
  

From the view of total logistics expense structure, in the first half of 2006, transport cost was RMB932.9 billion, rising 12.9% compared to the 1st half of 2005.

• Storage cost was RMB 531.4 billion, rising 18.6% compared to the first half of 2005.
• Management cost RMB 214.4 billion, rising 13.2% compared to the first half of 2005
• Third-party logistics in 2005 exceeded RMB 100 billion, rising about 30% compared to the previous year.
  

More and more global logistics corporations began to establish bases or distribution centers in Asia Pacific, such as UPS, FedEx, DHL, TNT, Exel, APL, BAX, Maersk, and Schenker.

Due to the rising price of petroleum and the increasing investment in facility and technology, the operation cost of logistics enterprises will increase dramatically.
On the other hand, intensive competition will lead to a price war. The services of the logistics enterprises become more and more professional in order to improve their profitability and competitiveness.

There are about 16,000 logistics companies with an industrial output value of more than RMB 39 billion in China.
It is forecast that the output value will reach RMB 1.2 trillion by 2010.

The huge market has attracted many freight transportation giants to join in. China logistics industry will maintain the rapid growth in the following several years. The promising logistics market in China will provide the investors with great opportunities.
Source: Research Connect

Shanghai port should handle 530 million tons of cargo this year so it will remain the world’s biggest freight port. Last year the figure was 443 million. Singapore is expected to come in second.

Shanghai has always been one of the world’s major ports although in its early stages it was always thought of as a river port, rather than an ocean port. During the Qing Dynasty, Shanghai became an important regional port for the Yangtze and Huangpu rivers. But even so, it became the biggest port in China, and arguably the world, from very early times.

So, although Shanghai has only been established since the 16th century — taking the construction of the city walls from 1553 as a start date — it has always been, in one sense or another, one of the world’s most important ports. A position it retains to this day. Only, perhaps, more so.
Source: Shanghai Daily and research

Shenzhen Airlines and Mesa Air Group have signed an agreement to create a regional airline that will be China’s first Sino-foreign joint venture specializing in feeder airline service.

Shenzhen Airlines said the regional carrier would build a ‘highway in the air’ between China’s second-tier cities and connect them with the trunk lines. Regions yet to be specified.

The new airline is also the first joint-venture airline between China and the United States. It is expected to start operation before the end of next year.

There is RMB500 million ($64 million) registered capital and the new company will be 51 percent controlled by Shenzhen Airlines, 25 percent by Mesa and 24 percent by Wilmington Trust, a Delaware-based financial service provider.

The new airline will be the first overseas joint venture by Mesa, one of the leading regional airlines in the United States. Phoenix, Arizona-headquartered Mesa operates 188 regional jets and flies to 173 cities in the United States, Canada and Mexico.

The new carrier, whose name has not been decided yet, will initially have 20 to 50-seat regional jets and is expected to add 20 planes annually. Its goal is to become China’s largest regional carrier with 160 to 200 feeder jets, each having 50 to 90 seats.

Zhao Xiang, chairman of Shenzhen Airlines, said, ‘Developing regional aviation business will have a big impact on our goal to become an aviation group.’
Source: China Daily

The fixed assets investment in logistics-related sectors totalled RMB793.9 billion, a 28% increase from the same period last year.

Transportation costs have witnessed a remarkable rise due to energy price hikes. China’s domestic logistics expenses totalled RMB2.62 trillion during the January-September period this year, an increase of 13.7% from the same period last year.
Source: China Daily

It could be that you could fly directly to Saipan from either Guangzhou or Shanghai. Now you can do so from Beijing. The direct flight, operated by Air China will be twice a week, every Thursday and Sunday.

Perry Tenorio, director of MarianasTourism Bureau, said, ‘We welcome more and more Chinese tourists to Marianas, the nearest US territory to China. Chinese visitors can enjoy rich cultural resource and historical relics on the islands. We will provide more favorable conditions for Chinese charter flights and visitors’ entry permits.’

He predicted some 900 Beijing travelers will fly on board of the direct flights by year end and the number will reach 16,000 in one year.

So where is Saipan and why would anyone want to go there?

It is the largest of the 15 islands of the Marianas which is in the western Pacific Ocean, is part of what is called the United States Commonwealth and always has been a destination of some controversy. There are about 60,000 people living there. The nearest biggish place is Guam about 600 km away. Saipan has always been a popular tourist destination because of the skin diving and the pleasant beaches. But the Japanese who were the main tourist stream have turned away from Saipan and the Marianas is looking to China to make up the shortfall.

Last year, Saipan hosted 33,000 Chinese visitors and the figure is still increasing at 15% annually.
Source: TDC Trade

Supply chain planning expert Fraser Ironside at the 4th Annual Supply Chain Modelling Forum run by Manufacturing and Logistics IT in the UK, said, traditionally, organizations operating in China have built their supply chains based on a need to ensure market penetration and product availability. Now the time has come for companies to review how they do it and save money through effective optimization.

Ironside, said, ‘Historically, the supply chain in China has always been unreliable, with highly fragmented distribution centre configurations driven by infrastructure constraints and the dominance of local players. However this is already beginning to change with the entry of foreign owned 3PLs and the ongoing improvements to the road network.’

At present, although China remains a low cost economy, spending on logistics in 2004 reached 21.3% of GDP. This compares to logistics spending of approximately 9% of GDP in Europe and the US. (Note that these figures are not always consistent. Think of them as approximations. They serve a purpose in highlighting a major discrepancy.)

Matters, however, are improving. Within just a few years, next day delivery for ex-stock product will become the standard service offer for top level customers, while the acceptable service time for make-to-order products will fall from the current 8-10 days to just 2 or 3 days.

For this reason, according to Fraser Ironside, network modelling is not something that can be carried out once every five years. It has to be an ongoing process to make sure companies benefit from the most efficient supply chain possible given their specific circumstances. Getting the supply chain right can make a significant difference to the bottom line and this is particularly the case in China today.
Source: Logistics IT

In January China’s two leading private transport and logistics firms will merge to create what might well be the country’s biggest comprehensive logistics service provider.

Qingdao-based SITC Maritime, China’s largest private shipper (one of its ships is shown in the illustration), and Beijing-based New Times International Transport Service, the biggest airfreight forwarder in export terms, have nearly merged. The joint company, Shanghai-based SITC Logistics, will have total assets valued at RMB one billion (US$127.7 million).

Yang Shaopeng, chairman and chief executive officer of SITC, said, ‘China’s logistics market is rather fragmented and lacks proper information support and a credit system. We hope to combine resources at the two companies to build the firm into the largest private logistics service provider to tap into a largely unmet demand in China.’
Source: Shanghai Daily

Early next year a luxury tourist train is expected to make a debut on the Qinghai-Tibet Railway. All one journalist desperately wants to know is where he can buy his ticket and reserve his seat on the first train. The train will be operated by the Qinghai-Tibet Railway Company in cooperation with foreign tourist agencies.

The Qinghai-Tibet Railway Company is based in Xining, capital of Qinghai in China’s remote northwest. An official said the luxury train will be equipped with the most advanced equipment in the world and will rival star-rated hotels in terms of convenience and comfort.

She also said that Qinghai may end its history of having no international portal entry in 2007, so that overseas tourists will be able to reach Qinghai directly from abroad and take the luxury train to visit the beautiful and mysterious Qinghai-Tibet Plateau.

The Qinghai-Tibet Railway, the first to link Tibet to the rest of China, starts in Xining and ends in Lhasa, capital of southwest China’s Tibet Autonomous Region. It was opened on July 1.
Source: Xinhua News Agency

China Merchants Holdings is moving further in its control of the Shenzhen port of Shekou by buying out two minority stakeholders and preparing to form a joint venture with Hong Kong’s Modern Terminals (MTL).

The stakes held by DP World and Swire Pacific in phases one and two of the Shekou Container Terminal were bought by CMHI for $408 million. The assets will go into the joint venture with Modern terminals, of which China Merchants will hold 70% and Modern Terminals 30%.

Swire Pacific received $178 million for its 17.5% interest in phase one and 17.15 % holding in phase two of the terminal. DP World’s unit P&O Dover got $228 million for 22.5% of phase one and 22.05% of phase two.

The deal will be finalised in the first quarter of next year.
Source: Cargo News Asia

Schenker has been named the official forwarding and customs clearance supplier of the Beijing 2008 Olympics. The company’s history includes working for previous Olympic Games - Athens 2004 and Torino 2006 Winter Olympics, and it has acted as the Official Supplier to the International Olympic Committee (IOC) since 2003.

Dr. Thomas Leib of Schenker AG’s Management Board said the logistics firm has ‘an outstanding track record’ for supplying freight services to ’sporting organizations, broadcasters, press agents, sponsors and suppliers.’
Source: Schenker