Archive for September, 2007

UK-based Gazeley Properties Limited, a wholly owned subsidiary of global retailer giant Wal-Mart, is scheduled to create a logistics center with a construction area of 53,000 square meters and a land area of 146.3 mu (or about 97,582.1 square meters) in the eastern Chinese city of Kunshan.

The first phase of the project will start next month and the project is scheduled to be completed by June 2008.

Kunshan is 55 kilometers west of Shanghai and this project is part of Gazeley China’s expansion plan. The company has already developed a distribution center in Tianjin and a warehouse in Jiaxing. The first to be finished in September 2007 and the second in July 2008. These two projects will provide services exclusively for Wal-Mart while the Kunshan warehouse is being developed and designed for leasing.

Gazeley China is planning to develop more logistics projects in the Yangtze River Delta, the Pearl River Delta in southeast China, the Peripheral Economic Zone of the Bohai Sea, and west China areas.
Source: Trading Markets

Larry Alberts, director of consultancy Oliver Wyman, a specialist in the surface transportation and energy sectors who advises companies on the Asian market and customer and business strategy, has given his view on China’s logistics market. And, if you are involved in any way with logistics in China it is worth clicking CargoNews Asia and reading the whole article.

He writes that a decade ago in China the problem with logistics was insufficient infrastructure, such as minimal available freight capacity on railroads.

As recently as a dozen years ago the geographic coverage of the railways was comparable to that of the US at the time of its civil war. Poor roads meant trucking was highly unreliable, and limited use of containers and poor warehouse conditions resulted in high rates of damage and loss to goods being handled.

Then he becomes more upbeat.

However, over the past 10 years there’s been huge investment and major improvement in infrastructure, quite visible in the roads and seaports, the expansion of the railway westward and the capacity upgrade on key trunk lines. In the 10th five-year plan, 6,000 km of railroad, 200,000 km of new roads, and more than 140 deep-water berths were planned and largely completed by 2006.

It goes on from there to give concrete advice on mergers and acquisitions and the essential due diligence. Well worth reading.
Source: CargoNews Asia

China has used its low-cost advantage to become a world leader in manufacturing. What happens if it sets its sights on distribution, too?

Larry Ravinett, senior vice president of logistics and supply chain solutions for National Retail Systems, a third-party logistics provider, said, ‘Among the things we do is freight consolidation, and 90% of the product we consolidate is coming from China. So we asked: What’s the purpose of bringing all of this stuff to the U.S., touching it three or four times to send it to a distribution center and put tickets on it, only to ship it back to stores?’

NRS has launched SinoNRS, a joint venture with China’s Sinotrans Group, the country’s largest integrated logistics provider with some 60 million square feet of warehousing space.

SinoNRS plans to offer retailers a solution to reduce distribution expense in the States.

Larry Ravinett says SinoNRS is working to develop Western-style DC’s with a degree of information technology and materials handling automation that is not presently being used in China. He said, ‘The new buildings we’re building are based on U.S. designs. We will have information technology, automated cross-docking and conveyor-driven distribution centers that are comparable to what we have in the United States.’

These distribution centers are not yet up and running but some retail clients have already committed to the program.

Larry Ravinett said, ‘When we’re done, we’ll have the capability to bypass a DC and deliver price-ticketed items directly to stores. Or, I’ll be able to take product that has 80% of the work done and send it to a regional DC where it can be stored for replenishment later.’

Some experts believe there are still timing and communication hurdles to overcome before China is a serious threat to the U.S. distribution industry. Experts said the same about China when talking about manufacturing.
Source: Modern Materials Handling

China will reach the magic 100 million TEU mark this year. (For the record a TEU is a Twenty foot Equivalent Unit or a sort of standard container. One 40 ft. Container (FEU) is equal to two TEU’s.) It recorded 72 million TEUs in the first eight months of this year. Last year it was 93 million TEUs.

Wang Qingyun, director general of the Communications and Transport Department of the National Development and Reform Commission, said, ‘There is no doubt that the total China container throughput will exceed the 100 million TEU mark this year.’ He said ‘China container cargo is still in the fast lane due to strong demand’.

Leading port in rate of growth, not overall size, was Guangzhou, which in the first eight months had a throughput of 5.97 million TEUs, up 42.2%.
Ningbo came second in container cargo growth. It handled 6.11 million TEUs in the first eight months, up 36.2%.
Shanghai came in third in growth rate with throughput at 17.09 million TEUs, up 22.4%. This year it expects it will reach 25 million TEUs this year. The port has already overtaken Hong Kong in size.

In the first eight months China’s 23% growth rate was much lower than in previous years. General cargo throughput was up 15.7% in the eight-month period compared with 18.5%.

Wang Qingyun said, ‘We’re no longer looking for high-speed growth, instead we are going after moderate growth that is sustainable and ecologically healthy.’
Source: CargoNews Asia

108 cities in China were involved in a campaign with the theme of ‘Green Transport and Health’ to ease traffic congestion in the cities. The cities set one or more zones open only to pedestrians, cyclists, taxis and buses between 7 a.m. and 7 p.m. The illustration gives a rough idea of the change this can bring. Top picture shows the system working; bottom picture normal congestion.

In southwest China’s Chongqing Municipality, citizens have been called on to ‘walk quickly one kilometer a day’ by the sports bureau.

In Beijing, 176 kilometers of public transportation lanes have been put into use, which shall be lengthened to 250 kilometers by the end of this year, bringing the average speed of buses from 14 kilometers per hour to 20 kilometers during rush hour. And twenty-three new bus lines have gone into service.

So serious attempts are being made to stop congestion and pollution.

However, Guangzhou, city with a population of more than ten million people and one million cars, rejected Public Transportation Week.

An unnamed official with the municipal government said, ‘Limiting the use of cars is not practical in the city.’ Plainly the official knows nothing of London and Ken Livingstone. Perhaps it should be more widely publicised.
Source: China.org.cn

Shanghai, the world’s second busiest container port handled 2.3 million TEUs — containers — in August and 17.1 million TEUs in the first eight months, up 17.8% and 22.4% respectively for the same periods last year.

This tempo will at the very least be maintained and perhaps increased with the opening of the four-berth, third phase at Yangshan, probably by the end of this year.

When the first phase of Yangshan opened in 2005, the port authority forced carriers to move all Asia-Europe services from Waigaoqiao to Yangshan. Then it told Asia-South America services to transfer to Yangshan.

Then it increased container handling charges at Waigaoqiao by about 20%, creating a price advantage for Yangshan port. It also subsidized moving costs for shipping lines shifting to Yangshan.

These efforts have brought results, as the first and second phase of Yangshan terminals are almost full.
Source: Cargonews Asia

In Shanghai, Metro line offered a free trial ride on its first phase of track. When it opens at the end of the year it will become the first subway route from the north-east of the city to downtown.

This is also Urban Public Transport Week in 108 cities across the country including Shanghai.

City residents are encouraged to commute on foot, by bikes or ride Metros, buses and taxis to support the week’s theme of ‘green traffic and health.’

Metro Line 8 runs from Shiguang Road Station, across the Huangpu River and ends at Yaohua Road Station in Pudong, where the World Expo site is under construction. The route runs across Yangpu, Hongkou and Zhabei districts, located in the northeast parts of the city, and then goes through Huangpu and Luwan districts, along the Bund, before extending to Pudong.

According to the current construction schedule by the end of this year the city will see another 100-plus kilometers of new Metro routes and extensions completed.
Source: Shanghai Daily

The focus of the Fourth China-ASEAN Expo is to be held in Nanning, (showing its charms in our illustration), capital of South China’s Guanxi province. The annual event, organized by China and the 10 ASEAN members, will be held from October 28-31.

Vice-Minister of Commerce Gao Hucheng said business leaders and top government officials from the region will attend the expo, which is expected to provide a platform for opportunities brought by the China-ASEAN free trade agreement.

Li Jinzao, secretary-general of the China-ASEAN Expo Organizing Committee, said worldwide logistics industry leaders are expected to participate.

There are good reasons for this:

North China’s Tianjin Port exported 57,000 tons of fruit to ASEAN members in the first seven months of this year, up 32.7% year-on-year.
China is the fourth-largest trading partner of ASEAN members, and vice versa.
Bilateral trading volume between China and ASEAN members reached $160.8 billion in 2006, up 23.4% year-on-year.
Gao Hucheng estimates total bilateral trade volume will top $190 billion this year and $200 billion in 2008, which would achieve a 2010 target two years ahead of schedule.
The two sides have been cutting tariffs since a free trade agreement was signed in 2002.
A goods trade agreement was implemented in 2005 and a service trade agreement was signed in July in which China promised to open up the construction, environmental protection and transport sectors.
The 10 ASEAN members will also open finance, medical services and transport to China. About 7,000 items are expected to get a zero tariff by 2010.
China mainly exports ships, textiles and vegetables to ASEAN members, and imports copper and rubber products.
ASEAN is the major market for Chinese companies in terms of labor cooperation and contracting projects.
By the end of 2006, ASEAN members had invested $41.9 billion in China, while investment from China to ASEAN is also increasing.

An important conference with much to discuss.
Source: People’s Daily Online

Chinese Premier Wen Jiabao, seen in our illustration, said in Dalian that the aim is to make Dalian not only a major harbor along China’s northeast coast but also a shipping center of Northeast Asia.

He said that all projects under construction should be carefully designed and planned and lead the way in the region. The premier urged the city to take a scientific approach to development and balance the economic development with environmental protection to turn Dalian into a well-developed, harmonious and ecologically beautiful city.

He had just attended the Summer Davos meeting in Dalian and said, ‘Good environment is one of the reasons why Summer Davos was held here. Some 1,000 foreign participants could not only visit local enterprises but also enjoy the blue sky with white clouds and experience Dalian’s efforts in energy-saving and sustainable development.’

While in Dalian, the premier visited Datyaowan bonded zone and the new harbor under construction.
Source: China Daily

Schneider Logistics has purchased the operating assets of China-based BaoYun Logistics. Financial terms of the acquisition were not disclosed.

Schneider said that this investment allows it offer more services on the domestic Chinese market including transportation, warehousing, cross-docking, 3PL, and consulting services.

Founded in 1998 by Zhi Hua Yu, BaoYun Logistics is in the top 100 of all logistics companies in China and is one of the country’s top 30 private logistics companies.

Martin Winchell, managing director of Schneider Logistics, China, said, ‘We’re taking very deliberate, strategic steps in China.’
Source: Logistics Management