某集团物流行业及发展趋势报告

July,2001COSCOIPOSUPPORTMATERIALSLogisticsServicesIndustryEnvironment&TrendAnalysis-COSCOCommentsandA.T.KearneyRemarksThecontentsofthisdocumentwerepreparedbyA.T.Kearneyandmaynotbeused,alteredordisclosedtootherparties,withoutthewrittenpermissionofA.T.Kearney.TheinformationcontainedinthisdocumenthasbeenobtainedfromexternalsourceswhichA.T.Kearneybelievesarereliable.However,A.T.Kearneycanmakenorepresentationastotheaccuracyorcompletenessoftheinformationorprojectionsderivedtherefrom.TableofContentsExecutiveSummaryMarketSize&GrowthGlobalChinaServiceDemandGlobalTrendsChinaTrendsCompetitiveEnvironmentGlobalChinaRegulatoryEnvironmentInformationTechnologyAppendixExecutiveSummaryA.T.Kearney’sdefinitionofthelogisticsservicesindustryStructuringandmanaging,onbehalfofcargoowners,solutionsinvolvingsomecombinationofpartsofthesupplychain(i.e.transportation,warehousing,(de)consolidation,etc.)Thelogisticsserviceindustryrepresentatremendousgrowthopportunity,bothgloballyandinChinaMarketCharacteristicConclusionCustomersareincreasinglydemandinghighvaluelogisticsservicesolutions,requiringglobalreachandadvancedsupplychainmanagementcapabilitiesIncreasingdemandforglobalreachandcapabilitiesfuelsconsolidationaslargefullserviceprovidersarepositioningthemselvesforsuccessChina’sentryintoWTOisexpectedtohavetwomainimplications-thelogisticsmarketwillgrowrapidly,andcompetitiveintensitywilldramaticallyincreaseStrongITcapabilitiesisbecomingacorecapabilityoflogisticsservicesprovidersandiscriticaltobuildingalogisticsservicesbusinessMarketSize&GrowthServiceDemandCompetitiveEnvironmentRegulatoryEnvironmentInformationTechnologySource:A.T.KearneyThegloballogisticsservicesmarketreachedanestimatedUS$190Bnin2000.TheChinamarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyatCAGR35%overthenextfiveyearsTheChinalogisticsindustrywillbeshapedbyChina’sentryintotheWTOandthesubsequentopeningofthemarkettoforeigncompetitionIndustryScenario2006RapidincreaseinM&AactivitiesKeyalliancesformedwithinthenext2-3yearsRapidexpansionofglobalplayersofferingsophisticatedend-to-endsolution,includinglogistics,transportationandITImplementationofe-commerceinitiativesandincreasingdependenceonITnetworkMergers,AcquisitionsandAlliancesGlobalCompetitorsTechnologyThelogisticsmarketwillgrowrapidlyCompetitiveintensitywilldramaticallyincreaseWTOEntrySource:A.T.Kearney1.MarketSize&GrowthThegloballogisticsservicesmarketreachedanestimatedUS$190Bnin2000ThegloballogisticsoutsourcingmarketisestimatedtoUS$190Bnin2000ThetransportationandrelatedexpendituresmarketreachedanestimatedUS$3.8Trillionin2000,andisexpectedtogrowatanannualrateof2.3%overthenext5yearsTheAsianlogisticsoutsourcingmarketisestimatedtoreachUS$31Bnin2001andisexpectedtogrowatCAGR39%overthenextfiveyearsThegreatestopportunitiesforoutsourcingareintransport,warehousing,andtransportmanagementThegrowthofthegloballogisticsservicesindustryismainlydrivenbyshippers’propensitytooutsourcelogisticsservicesandorganictransportationmarketgrowthCustomerelectronics,automotiveandapparelrepresentthemostattractiveopportunitiesforlogisticsservicesinChinaTheChinamarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyatCAGR35%overthenextfiveyearsTheChinalogisticsservicesmarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyoverthenext5yearsThelogisticsservicesindustryisstillatanearlystageofevolutioninChinaThetransportationandrelatedexpendituresareproportionatelyhigherinChinathaninmostdevelopedcountriesandNIEs-indicatingamajorimprovementopportunityInCoastalChina,demandforlogisticsservicesisexpectedtobestronginGuangdongandShanghaiInInlandChina,thelargestdemandpotentialisinSichuanandtheHubei/YangtzeriverregionGrowthinthelogisticsservicesindustryinChinawillmainlybedrivenbycontinuedmacroeconomicgrowthandincreasedpropensitytooutsourcelogisticsFavorablemacroeconomicoutlookPublicpolicyandspendingIncreasinginterestinoutsourcingforlogisticsneedsGrowingITandE-businessMarketSize&Growth-GlobalThegloballogisticsoutsourcingmarketisestimatedtoUS$190Bnin2000Source:Chinainfobank,CSFB,A.T.KearneyGlobalTransportationandLogisticsMarketSize(2000)Transportationandrelatedactivitieshandledbymanufacturers,wholesalers,retailersthemselves(e.g.privatefleet,privatewarehousing)Discretesetsoftransportationandrelatedservicesoutsourcedbymanufacturers,wholesalers,retailers(e.g.publicwarehousingetc.)Combinationof“transportationandrelatedservices”provisionedby3rdpartylogisticsserviceprovidersUS$3,800BnOutsourcedUS$190BnGlobaltransportationandrelatedexpendituresGlobaloutsourcedtransportationandrelatedservicesGloballogisticsoutsourcingmarketUS$BnThetransportationandrelatedexpendituresmarketreachedanestimatedUS$3.8Trillionin2000,andisexpectedtogrowatanannualrateof2.3%overthenext5yearsNote:(1)AsiaincludesJapan,HongKong,Korea,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyAnalysisTransportationandRelatedExpendituresbyRegion(2000)TransportationandRelatedExpendituresbyFunction(2000)US$BnTotal=US$3,837BnOthers:-1.4%Asia(1):2.2%Europe:2.6%NorthAmerica:4.0%3,4243,8374,389CAGR=2.3%CAGR=2.8%Warehousing$304BnTransport$2,204BnOthers$55BnShipper-Related$20BnInventory$1,102BnAdmin$152BnCAGR2000-2006TheAsianlogisticsoutsourcingmarketisestimatedtoreachUS$31Bnin2001andisexpectedtogrowatCAGR39%overthenextfiveyearsNote: AsiaincludesChina,Japan,HonkKong,Korea,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyAnalysisLogisticsOutsourcingMarketinAsia-GrossRevenue(US$Bn)CAGR(99-01)=38%CAGR(01-06)=39%Thegreatestopportunitiesforoutsourcingareintransport,warehousing,andtransportmanagementTransportWarehousingTransport

ManagementITSupplementary

LogisticServicesPurchaseOrder

ManagementLogistics

Management30%47%48%85%20%40%39%76%23%2%5%16%%ofrespondentsoutsourcing1998%ofrespondentsplanedoutsourcing200313%8%OutsourcingbyFunctionResourcerequire-mentsComplexityNote: Thepercentagemaynotaddupto100%duetoroundingSource:BasedonseveralA.T.Kearneystudies,including:Worldwidestudycomprising280participants(automotive19%,electronics25%,retail27%,chemicals29%)Europeanstudycomprising500participants(retail26%,food&beverage26%,commodities22%,machinery12%,automotive7%,electronics&high-tech4%)Outsourcingofnon-corebusinessactivitiesOrganicgrowthoftransportationmarketsIncreasedcomplexityofglobalsupplychainsRecognitionbymanyshippersthatsupplychainstrategymaybeakeycompetitiveadvantageWillingnesstooutsourcewhenlogisticsnotseenascorecompetencyDevelopmentofsuperiorlogisticscapabilitybyafew3PLsGrowthindemandfortransportationservicesexpandswithinternationaltradegrowthGlobalizationofmanyindustriesmeansgoodsneedtomoveoverlongerdistancesatfasterspeedswithhigherreliabilityGrowthinLogisticsServicesSource:UBSWarburg,IDCGrowthDriversDetails12Thegrowthofthegloballogisticsservicesindustryismainlydrivenbyshippers’propensitytooutsourcelogisticsservicesandorganictransportationmarketgrowthConsumerelectronics,automotiveandapparelrepresentthemostattractiveopportunitiesforlogisticsservicesinChinaNote: 1.Sizeofcirclerelativetosegmentsizein20002.AnalysisisindicativeonlySource:A.T.KearneyfieldinterviewsandresearchHighLowGrowth(2001-2006)RemarksHighlymarket-oriented,needquickresponsetoconsumerfeedbackManufacturershavetotoimproveoperationefficiencycontinuouslyduetointensecompetitionRelativelyhighproductvalueandlesspricesensitiveHighrequirementfortimingandreliabilityoflinersHighgrossmarginindustry,productioncostandlogisticsaccountforlesspercentageofsalesPrefertimelyfeedbackfromdestinationports,i.e.tradeconsultingservicesAutomotivesuppliesinvolveover30,000parts,whichneedconsolidatingsupplierstohandlelogisticsIntensecompetitiondrivescompaniestoreducecost,currentinefficiencyinself-handlingleadscompaniestoconsideroutsourcingservicesactivelyHighvalueproducts,notverypricesensitive,butsometimesdecisionsaremadeoverseasPackingrequirementinvolvestechnicaldifficulties,unwillingtooutsourcelogisticsservicesHighprofitindustry,notverypricesensitiveHighqualityrequirementfordry,nosmell,noleakingcontainers,hencecontainerizedinfactoryClearanceofcigarettesneedstobedonebyprofessionalI/EcompaniesormanufacturesLargeandspecialshape,thereforethewaytoputthemintocontainerscanimpactthenumberofcontainerstobeused,whichdirectlyrelatedtocost-usuallydonein-houseCostsensitive,firmsusuallychooselessbusyseasontogetcheaperpricesFrozenproductsandfreshproductsneedtobehandledfastwithcareOtherproductsarelow-valueandneednospecialservicesLowvalueproducts,highlypricesensitiveLowerqualityrequirement,usuallycontainerizedatportsConsumerElectronicsApparelAutomotiveMachineryTobacco&LiquorFurniturePrimaryGoodsChemicals&MaterialsIndustryLowHighConsumerElectronicsApparelAutomotiveOutsourcingPropensityTobacco,LiquorPrimaryGoodsOpportunityAssessmentbyIndustryChemicals&MaterialsFurnitureMachineryAddmarketandtrendsanalysisbyindustryMarketSize&Growth-ChinaTheChinalogisticsservicesmarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyoverthenext5yearsLogisticsOutsourcingMarket-GrossRevenue(2000,US$Bn)Note: AsiaincludesChina,Japan,HongKong,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyEstimatesCAGR=35%190230.61ChinaLogisticsServiceMarket(US$,Bn)ThelogisticsservicesindustryisstillatanearlystageofevolutioninChinaCharacteristicsEmergingdemandforoutsourcedlogisticsservicesLowvalueaddedservicessuchastransportandwarehousingarethemajortypeofservicesoutsourcedTraditionalin-housebehaviourbeingimpactedFastgrowthoflogisticsuserbaseandhigherrequirementforbroaderservicesLargenumberofservicesproviderscompetingforcustomersandhumanresourcesMosthighvalueaddedservicesarefreeandprovidedassellingpointsLogisticsoutsourcingbecomescommonpracticeandanimportantleverforcompetitionConsolidatedservicemarketwithafewestablishedmarketleadersLogisticspenetrateinsupplychainandreplacetraditionalbusinessmodelsGloballogisticsintegratorsprovideone-stopsolutionworldwideSpecializationandclosecooperationamonggloballogisticsserviceprovidersOptimizedallocationandintegrationofresourcesalongthesupplychainStageEmergenceGrowthPenetrationGlobalizationWorldLeading(US)ChinaTodaySource:A.T.KearneyWarehousingandDistributionTruckingRailFreightAlthoughHeavilyUsed,RailwayFreightHasLongTransitTimesandServiceReliabilityIsPoorRailwayContainersAreNotCompatibleWithShippingCompanyContainersAirlineCustomsBrokerageCourierLimitedPresenceofForeignFirmsAsJVE.G.DHLSinotransRegionalSegregationinOperationLogisticsCenterandFreightForwardingShippingThedomesticwarehousingmarketiscurrentlysmallandover-suppliedwithbasicwarehousesprovidingvirtuallynovalue-addedservicesSomeconsolidationjuststartedamongthelargewarehousingcompaniesRivertransportationhasdeclinedMostvesselsarecharacterizedbylowspeedandhighenergycostsTruckingcompaniesareonlyallowedtooperateinrestrictedregionsGovernmenthasestablished15FreeTradeZonesandsomelogisticscentersaresetupthereInlandtransportationishandledbydomesticfreightforwarderwhoisusuallysub-contractedbytheinternationalfreightforwarderSevendomesticairlinesdominateregionaloperationsDesignatedforeigncarriersaregivenamaximumentitlementof50tonnesperweekManycustomsclearingbrokeragefirmsandconsiderableconfusionaboutrolesCustomsclearingprocedurestookatleast½-1daypreviouslybutexpectedtobeshortenedto1hourThelogisticsservicesindustryisstillatanearlystageofevolutioninChina(continued)Source:A.T.KearneyAnalysisChinaLogisticsServicesTransportationandrelatedexpendituresareproportionatelyhigherinChinathaninmostdevelopedcountriesandNIEs–indicatingamajorimprovementopportunityTotalTransportationandRelatedExpendituresand%ofGDP(2000)Note:(1)VAS:Value-added-services(2)Includingpackaging,admin,informationservices,ect.Source: BowersoxandCalantone,CSFB,IMF1997study;Chinainfobank;A.T.KearneyAnalysisUS$BnChinaTransportationandRelatedExpendituresBreakdownbyFunction(2000)Total=US$248BnUS$Bn(1)(2)DemandGrowthInCoastalChina,demandforlogisticsservicesisexpectedtobestronginGuangdongandShanghaiHighLowHebei,Beijing,Tianjin4BeijingistheNo.1aircargocenterinChina.Inaddition,Beijing’shi-techindustry,whichneedsalotofairtransportation,isdevelopingveryfastOver80%ofthevolumethroughTianjinportareagriculturalproducts,furniture,metalhardwareandrawmaterials,allbeinglowvalueproducts.Inaddition,mostshippersareinpoorfinancialconditionsandareverypricesensitiveShandong(Qingdao)4Qingdaohasseveralfamouslocalcompanies,suchasHaier,HiSense,AukmaandQingdaoBeer.TheyaremorequalityorientedandlesspricesensitiveFrozenproductsaccountfor15-20%ofthevolume.Qualityrequirementsforfrozenproductsareveryhighintermsoftimingandhandlingcare.Hence,frozenproductsshipperstendtobelesspricesensitiveandmorequalityconcernedFootwearandgarmentsaccountforsignificantportion.SomelargecustomerssuchasPaylessShoes(No.1customerofCOSCOinvolume)requiresaccurateshippingtimeandfullrangeofsophisticated3PLservicesfromP/Omanagement,tradeconsultingtospacebooking,warehousingandtransportationProvinceLogisticsDemand–SelectedProvincesinCoastalChinaGuangdongDemandSize5RemarksMajorexportsareprocessingoflowervalue-addedproductsnospecialrequirementforlogisticsquality;Roadtransportationisconvenient,oftencontainerizedinfactorytoreducecostlessneedforwarehousing/consolidationElectronicsindustryisboominginDongguan,whichhassomeleadingcompanieslikeHuaweipotentiallargeprofitablecustomersStrongWeakShanghai(Jiangsu,Zhejiang)5Shanghaiisthefastgrowingeconomic/financialcenterinChina,whichhassomemajorMNCssuchasSGM,Acer,Philips,etc.Theyarematuredcustomersoflogisticsservicesandlesspricesensitive.Ontheotherhand,togetthedealsfromthemusuallyneedstoinvolvehighlevelnegociationLargecompaniesinShanghaiandnearbyareasaremainlyJVsofautomobileandconsumerelectronicsindustry,whichhavehighproductvalueandlowerpricesensitivitySource:A.T.KearneyfieldinterviewsandanalysisDemandSizeSichuan(Chengdu)Havethe3rdlargestdistributioncenterinChina,thelargestpopulation,andimportantheavyindustrybaseThelogisticsindustrytherehasalreadyattractedinterestofforeignlargeshipperslikeIkeaandinvestorsincludingHutchisonWhampoaLocatedinmountainareas,roadtransportinfrastructureisinconvenient,sohighlyrelyingonrailtransportChongqing2Agriculturalproducts,metalproductsandmotorcycles,whichtotallyaccountforover80%oftheexportvolume,arealllow-valueproducts,pricesensitiveandhaveflatgrowthUnderdevelopedinfrastructure,esp.roadandrailtransportationhavelimitedforeigninvestmentsinthisregion.Cargoesusuallytransportedbybarges,whichisthecheapestmodeProvinceIninlandChina,thelargestdemandpotentialisinSichuanandtheHubei/YangtzeriverregionLogisticsDemand––SelectedProvincesinInlandChinaYunnan2DemandGrowthRemarksMostimportantexportindustryistobacco,whichhashighprofitmargin,highqualityrequirementforlogisticsservices,andnotverypricesensitiveExportsforwood,woodenmaterialsandfurniture,whichaccountedforover30%ofexportvolumebefore,arelargelyreducedduetonewlyimposedgovernmentsanctiononcuttingtreesHighLowStrongWeakSource:A.T.KearneyfieldinterviewsandanalysisHubei,YangtzeRiverRegion3Exportsarelow-valueproductsincludingtobacco,cotton,chemicalsandsteelmaterialsManyimportsarematerialforJVs(e.g.CitreonandDongfengCummins),ofwhichdecisionsareusuallymadeoverseasMarketisveryfragmentedandshippersgenerallyhavesmallscale/volumeNowarehouses/pilingcenterswithmoderncontainerhandlingcapacityandadvancedITstructureareavailable,canbeapotentialdevelopmentarea3GrowthinthelogisticsservicesindustryinChinawillmainlybedrivenbycontinuedmacroeconomicgrowthandincreasedpropensitytooutsourcelogisticsGrowthDriverImplicationTheChineseeconomyisexpectedtogrowatCAGR7%overthenextfiveyears.IncreasedinternationalanddomestictradewilldrivedemandforlogisticsservicesPublicpolicyandspendingsupportsimprovementsinChina’slogisticsinfrastructure,providingopportunitiesforfurtherexpansionoflogisticsserviceproviders.Capableforeignserviceprovidersarelimitedinbusinessscopebyregulation,andtheirfullentryafterWTOwilldrivetheindustrytowardinternationalbestpracticesThereisincreasinginterestamongChina-basedenterprisesinoutsourcingforlogisticsservices.OverseasbusinessesareextendingtheirsupplychainsdeeperintoChinaThefastgrowingmarketinonlineB2BtransactionsprovidesanadditionalmarketsegmentforlogisticsservicesFavorableGrowthOutlookfortheChinaLogisticsServicesIndustryFavorableMacroEconomicOutlookPublicPolicyandSpendingIncreasingInterestinOutsourcingforLogisticsNeedsGrowingITandE-Business1234Source:A.T.KearneyAnalysisTheChineseeconomyisexpectedtogrowatCAGR7%overthenextfiveyearsSource:Chinainfobank,A.T.KearneyAnalysisProjectionofChina’sGDPGrowthandStructure(RMB,Bn)ContinuousgrowthinGDPindicatesarobustandfastgrowingmacroeconomy,providingopportunitiesforsophisticatedlogisticsserviceprovidersTheeconomicstructurewillbecontinuouslyoptimizedandupgradedLogisticsisdirectlycorrelatedwiththemanufacturingindustry,thereforegrowthofsecondaryindustrieswillleadtothegrowthoflogisticsservicesImprovedservicesindustrieswillalsohaveapositiveimpactonthelogisticssectorImprovedsupportiveservicessuchaslegal,accounting,etc.ImprovedtelecommunicationcapabilitiesRemarksSecondary:7%Tertiary:9%CAGR(01-06)Total:7%Primary:3%13,3679,560FavorableMacroEconomicOutlook1DemandforlogisticsservicescomesfrombothinternationalanddomestictradeSource:HongKongTradeDevelopmentCouncilResearch;ChinainfobankDemandforLogisticsServicesMoreInternationalTradeMoreDomesticTradeInternationaltradeInternationaltradehassustainedtheglobaleconomicfluctuationandkeptfastgrowinginthepast5yearsItisprojectedtogrowataCAGRof7.5%,withtotaltradevaluereachingUS$680Bnin2005ExportsExpectedtorisebyanadditional2.4%peryearoverthefirstfiveyearsofWTOentryShareasworldexportsisprojectedtorisefromcurrent3.5%to7.3%in2005ImportsProjectedriseofUS$21.3BnafterWTOProjectedannualgrowthratewillbemarginallyfasterthanexportDomesticTradeCAGRofretailsalesofconsumergoodsinthe“Ninth5Year”was11%PositiveoutlookduetocontinuouslygrowingpurchasingpowerDevelopmentofchainstoresSalesrevenueofchainstorecorporationshasexperiencedoubledigitrisefrom1997MultinationalchainstoreshavebeenaggressivelyimprovingtheirpresenceinChinamarketInter-citytradeCurrentlymorethan50%oftheforeignindustrialandretailfirmsdistributedtheirproductsinmorethan50citiesInter-citytradewillbefrequentafterWTOFavorableMacroEconomicOutlook1TheStateEconomicandTradeCommissionhasestablishedamasterplanfordevelopinglogisticsservicesinChinaStateEconomicandTradeCommissionLogisticsIndustryTradePlan30PilotCentersInter-regionalNetworksSupplyChainSystemsSelectsuitableenterprisesinvariouskeycitiestoestablish30pilotlogisticsanddistributioncenters10NationalEnterprisesAbout10specializedkeyenterpriseswithnationallogisticsanddistributionnetworkswillbedevelopedRealignassetstoforminter-regional,inter-sectorandinter-ownershiplogisticsanddistributionnetworksEffortswillbemadetoexplorethepossibilityofusing3PLanddistributionenterprisestobuildsupplychainsystems,andtobringfacilitiesandservicesoflogisticscompaniesclosertoadvancedinternationalstandardsPublicPolicyandSpending2AwidearrayofgovernmentsupportedlogisticsinfrastructuredevelopmentprogramsareunderwayacrossChinaSource:ChinainfobankExamplesofGovernmentInitiativestoImproveLogisticsInfrastructureAnumberofnationallogisticscentersareunderconstruction,withreasonablesize,standardizedoperation,andmodernfacilitiesCoastalLargeCities-LogisticsCenterInlandAreas-Road/RailwayModernthirdpartylogisticsanddistributionbaseItsmainbodywillbelinkedto7railwaysandhundredsofrailwaytransitpointsExpectedtoserveforthedispatchofover90%ofdailynecessitiesinthecityAlsoserveeasternChinaandthewholecountryShanghaiCommercialLogisticsCenterPublicPolicyandSpending2Highwaydensitywillgrowtoabout1650km/10000sq.kminyear2005InvestRMB270BntoupgraderailwayinfrastructureNewrailways,electricrailways,highways,expresswaysareinphase:InterviewswithSOEsandforeigninvestedenterprisesinChinaindicatearelativelystronginterestinoutsourcinglogisticsservicesSource:A.T.KearneyfieldinterviewsandresearchSOEsusuallyhaveownwarehousesandtruckingdivisions,therefore,theydemandlesswarehousing,transportationandotherrelatedvalue-addedservices.However,infaceofincreasedcompetition,SOEshaveagrowinginterestinoutsourcinglogisticsForeigninvestedenterpriseshavethehighestrequirementforlogisticsservicesintermsofrangeandquality.ThesecompaniesareextendingtheirsupplychainsintoChina-replacingmiddlemenwhousedtogetChinaorigincargototheport.MNCswillbelookingforlogisticsservicescompaniesinChinatohelpthemfillthevoidImport/exportcompanieshavetheleastdemandforlogisticsservicesproviders,becausemostofthesecompaniesalsoprovidetransportation,customsclearanceservices,etc.Remarks%ofRespondentswithInterestinOutsourcingLogisticsServices(2001)IncreasingInterestinOutsourcingforLogisticsNeeds3China-basedcompanieshaveapositiveattitudetowardspurchasingadvancedlogisticsservicesandquality,speed,andpricearethemostimportantpurchasingcriteriaNote: (1)SurveybytheChinaWarehouseAssociation(2000)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource:Chinainfobank,ChinaWarehouseAssociate,A.T.Kearneyfiledinterviewsandresearch7%22%26%29%44%52%64%75%LookingfordistributionservicesPrefertransportationcompaniesUsegenerallogisticsagentsPrefertrunklineservicesLookingfornewlogisticsagentsHirethirdpartyagentsHopethatnewlogisticsproviderswillprovidecomprehensivelogisticsservicesLookingformodernlogisticscompaniesInterestinLogisticsServices––SurveyResults(2000)LogisticsServicesPurchasingCriteria-China0.880.810.790.770.680.910.910.93NetworkDocumentationReputationInfoTrackingProfessionalismPriceServiceSpeedServiceQualityRelativeImportanceHighAvg.=0.82IncreasingInterestinOutsourcingforLogisticsNeeds3LowOnlinetransactionsprovidesanadditionalsourceofgrowthforlogisticsservicesSource:ResearchReportofChinaE-BusinessAssociationandNetworkEvaluationCenter,Apl.2001GrowthofOnlineTransactioninChina(US$,Bn)BtoB(US$,Bn)BtoC(US$,Bn)CAGR(00-04)B2B:53%B2C:167%GrowingITandE-Business4Industry-PublicinformationplatformReducingcostandoverlapininvestment,informationshareCustomers/shippersStandardbarcodingsystem,easierforoutsourcingBetterfacilitiestocommunicatewithserviceproviders,easiertomanageandsuperviseServiceproviders-IntranetCostreductionfromhigherefficiencyBetterservicequality,becauseofinternet/intranetenabledreal-timecargotracking,etc.Broaderservicerange,e.g.tradeconsultingCurrentIndustryInitiatives2.ServiceDemandCustomersareincreasinglydemandinghighvaluelogisticsservicesolutions,requiringglobalreachandadvancedsupplychainmanagementcapabilitiesServiceDemand-GlobalTrendsTraditionally,costreductionhasbeenthemainreasonforcompaniestooutsourcelogisticsToday,customersareincreasinglydemandingmoreadvancedservicesandend-to-endsolutions“Demand-Pull””logisticsrequiresthelogisticsserviceproviderstobeflexibleandto‘‘control’alargepartortheentiresupplychainLeadinglogisticsserviceprovidersaredevelopinglogisticsone-stop-shops-fromrawmaterialsourcingtodeliveryoffinishedgoodsCustomersareincreasinglyinterestedincontractswithbothfixedandvariablepricingschemes-basedonrisksharingTheopportunityforrisk-sharingcontractsisconsideredtobegreatestintransportationandinventorymanagementServiceDemand-ChinaTrendsIntheChinamarket,logisticsdemandisstillcomposedofbasicservices,suchastransportationandwarehousingGoingforward,demandforlogisticsservicesinChinawillmainlycomefromTransportation/Distribution,Warehousing/ConsolidationaswellasCustomsBrokerageandForwardingThequalityoflogisticsservicesofferedinChinaarenotgood––asindicatedbypoorperformanceonon-timedelivery,cargolossanddocumentaccuracyHowever,satisfactionlevelsforlogisticsservicesinChinaarerelativelyhigh,possiblyindicatinglowexpectationsServiceDemand-GlobalTrendsTraditionally,costreductionhasbeenthemainreasonforcompaniestooutsourcelogistics1.Reduceandcontroloperatingcosts2.Improvecompanyfocus3.Gainaccesstoworld-classcapabilities4.Freeinternalresourcesforotherpurposes5.Resourcesarenotavailableinternally6.Acceleratereengineeringbenefits7.Functiondifficulttomanage/outofcontrol8.Makecapitalfundsavailable9.Sharerisks10.Cashinfusion15%––25%15%10%––15%6%––8%3%––5%4%––6%20%––28%10%––15%10%––12%7%––10%10%––13%EstimatedCostSavingNote:(1)Useof53-footequipment(2)Consolidation,schedulingandmodeselectionSource:CSFBHardSavings(mainlytransportation)DynamicconsolidationDedicatedoperationsModeconversionCubeutilization(1)CarrieroptimizationRatemanagementInbound(2)SoftSavings(mainlywarehousing)ReverselogisticsLocationstudyInventoryDistributiondesignsystemAreaTop-tenReasonsCompaniesOutsourceLogisticsToday,customersareincreasinglydemandingmoreadvancedservicesandend-to-endsolutions,suchassupplychainintegration733333333475353536666667373808087LaborCostSavingsTransportationCostSavingsAccesstoSkillsFreedomtoFocusonCoreCompetenciesCapitalA