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Logistics Market China

November 2014

Executive Summary
Market

Drivers &
Challenges

Government
Initiatives

Trends

Logistics market value in China is expected to reach USD 55.1 tn by 2018 from USD 28 tn in 2012, growing at a
CAGR of 11.9%
Industrial products accounted for a major share of 91.4% of the logistics market value in 2012
Challenges:
Drivers:
- Rise in Logistics Costs Due to Low Efficiency
- Healthy Economy
- Lack of Modern Logistics Facilities
- Rising Income and Increasing Domestic Consumption
- Inadequate Warehouse Space
- Growing E-commerce Business
- Regional Protectionism
- Manufacturers Shift to the West
- Constraints in Human Resources
- Strong Retail Sales
- Preference Towards Self Management
- Opportunity from Cold Chain Logistics
- Opportunity from Pharmaceutical Logistics
Reorganization of Logistics-Related Administrative Institutions in 2008
Fragmented Regulatory Framework
Development Plan of Commercial Logistics (2011)
Logistics Key Focus Areas under the 12th Five Year Plan (2010-2015)
Medium-and Long-term Development Plan of Logistics Industry (2012-2020)
Seven point plan for (2014-2020)
Development of National Transport Infrastructure
Market Consolidation
Logistics Outsourcing
Inland Expansion of Third Party Logistics
Rising Investments
Major Players

Competition

Sinotrans Ltd.

FedEx Corporation

LOGISTICS MARKET IN CHINA 2014.PPT

DHL Logistics Pvt. Ltd.


2

Macroeconomic Indicators
Introduction
Market Overview
Drivers & Challenges
Government Initiatives
Trends
Mergers & Acquisitions
Competitive Landscape
Strategic Recommendations
Appendix
LOGISTICS MARKET IN CHINA 2014.PPT

Macroeconomic Indicators (1/3)

SAMPLE

Current Account Balance


USD bn
f6

400
300

a1

200

b2

c3

d4

20--

20--

20--

e5

100
0
20--

20--

20--

Exchange Rate: Half Yearly


Period Average

USD/INR

Period High

Period Low
d1

c1

d3
a1

6.08

a3

1/1/14

d2

c2

b1

a2

e1

b2

e2
e3

c3

b3

2/1/14

3/1/14

LOGISTICS MARKET IN CHINA 2014.PPT

4/1/14

5/1/14

Logistics Industry Framework

SAMPLE

Load Logistics
Provider (LLP)

Contract Logistics (3PL)


Professional Services

Courier

Value Added Services, Warehousing,


Transportation, Distribution

Postal / Mail
Services

Consulting, IT Systems Integrators,


SCM Application Providers

Equipment
Providers

Airports

Cargo Rail
Companies

Cargo Airlines
Regulator
(Government Authorities,
Industry Association)

Railways
Logistics related
Financial Services

Express
Shipping
Companies

Sea and Inland


Ports

Infrastructure
Carriers

Parcel

Delivery Type
Service Providers

4PL
Road/ Highway
Providers

Trucking
Companies
LTL / FTL
Freight Forwarding
Road LTL / FTL, Air Freight,
Sea Freight, Rail Freight

Note: LTL refers to less than truckload, FTL refers to full truckload, 3PL refers to Third-Party Logistics,
4PL refers to Fourth-Party Logistics and SCM refers to Supply Chain Management
LOGISTICS MARKET IN CHINA 2014.PPT

Logistics market in China is exhibiting rapid development


with annual double digit growth expected through 2012-18
Logistics Market Overview

Logistics Market Value and Growth

Logistics industry is acting as a bridge between the value


chain from production to sales

USD tr

It plays a key role in Chinas smooth economic


development

r
q

11.9%

a1

a2

a3

20--

20--

20--

a4

a5

a6

In 2012, the logistics demand coefficient which is the


logistics industrys value to GDP ratio, was 3.4, which is
higher than the coefficient in 2011, implying a steady
growth in the logistics market

Booming manufacturing sector is the main factor behind


Chinas economic development

Logistics Market Value Category-wise

a7

Industrial products have the maximum value in the countrys


total logistics value

x2 x4
x5
x3

20--

20--

20--

Segment 1
Segment 2

Logistics industry is highly dependent on transport


facilities for its growth
Growth in the logistics industry will accelerate the network
and density of the five major segments of the market
express, road freight, air freight, contract logistics and
international freight forwarding

20--

Segment 3
Segment 4
Segment 5

x1

2012
LOGISTICS MARKET IN CHINA 2014.PPT

Drivers & Challenges Summary

Challenges
Drivers
Healthy Economy
Rising Income and Increasing Domestic
Consumption

Rise in Logistics Costs Due to Low


Efficiency
Lack of Modern Logistics Facilities
Inadequate Warehouse Space
Regional Protectionism

Growing E-commerce Business


Constraints in Human Resources
Manufacturers Shift to the West
Strong Retail Sales

Preference Towards Self Management

Opportunity from Cold Chain Logistics


Opportunity from Pharmaceutical
Logistics

LOGISTICS MARKET IN CHINA 2014.PPT

Government has implemented certain measures to


reorganize the regulatory structure of the logistics industry

SAMPLE

Reorganization of Logistics-Related Administrative Institutions in 2008

In 2008, there was a major reorganization at the ministry level to streamline government bodies
associated with the transport system
Ministry of Transport was established by consolidating the functions of a number of government
departments regulating civil aviation, postal services, communications and urban public
transportation
According to Chinas new Postal Law which became effective on 1st Oct 2009, only Chinas state owned post
offices can deliver domestic letters and documents
This law also imposes a minimum capital requirement of ~USD72,963, indicating the exit of small players from the market

Ministry of Communications
Civil Aviation Administration
of China
Urban traffic management
under the
Ministry of Construction

State Bureau of Civil


Aviation
Functions
merged

Ministry
of Transport

Under
Purview of
State Post Bureau

LOGISTICS MARKET IN CHINA 2014.PPT

Trends Summary
Development of National Transport Infrastructure

Market Consolidation

`
Key Trends

Logistics Outsourcing

Inland Expansion of 3PLs

Rising Investments

LOGISTICS MARKET IN CHINA 2014.PPT

SAMPLE

Porters Five Forces Analysis

Impact
x
Threat of New Entrants

Impact
x

Bargaining Power of Suppliers

Impact
x

Competitive Rivalry

Impact
x

Bargaining Power of Buyers

Impact
x

Threat of Substitutes

LOGISTICS MARKET IN CHINA 2014.PPT

10

SAMPLE

Competitive Benchmarking (2/5)

Key Ratios of Top 3 Companies Operational Basis (FY 2013) (1/3)


Operating Margin

Net Margin

40
30

a1
b1

20
10

a2

b2

a3

b3

Company A

Company B

Company C

Company A recorded operating margin of x1%, higher than that of Company B which recorded operating margin of
y2% but lower than that of Company C which recorded operating margin of z3%
Net margin for Company A , Company B and Company C are a1%, b2% and c3% respectively, wherein Company A has
the highest net margin among these three companies

LOGISTICS MARKET IN CHINA 2014.PPT

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Public: Domestic Company Company 1


(1/5)

SAMPLE

Company Information

Offices and Centres India

Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange

Mumbai

Head Office

Products and Services


Category

Products/Services

Key People
Name

Designation

Person 1

MD and Executive Director

Person 2

VC and VC of Share Transfer


Committee

Person 3

Director

Person 4

Director

LOGISTICS MARKET IN CHINA 2014.PPT

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Public: Domestic Company Company 1


(2/5)

SAMPLE
Key Ratios

Financial Snapshot
Total Income

z1

a3

a1

c
b

a4

a2

Particulars

Net Profit/Loss

z2

z3

z4

q
p

2010

2011

2012

2013

Financial Summary
The company earned a net profit of INR x1 mn in FY 2013, as compared to
net profit of INR x2 mn in FY 2012
The company reported total income of INR y1 mn in FY 2013, registering an
increase of y2% over FY 2012
The company earned an operating margin of z1% in FY 2013, an increase of
z2percentage points over FY 2012
The company reported debt to equity ratio of a1 in FY 2013, an increase of
a3% over FY 2012

2013

2012

2011

2010

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Key Financial Performance Indicators


Indicators

y-o-y change
(2013-12)

Value (20/03/2014)

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved

LOGISTICS MARKET IN CHINA 2014.PPT

Decline

13

Public: Domestic Company Company 1


(3/5)

SAMPLE

Key Business Segments


Segment 1
C%

a1%

B%

b1%

Key Geographic Segments

Segment 2

b2%

Region 1

b3%

b4%

A%

Region 2

C%

x1%

B%

y1%

x2%

x3%

x4%

2010

2011

2012

2013

A%
2010

2011

2012

2013

Business Highlights
Description

News

Overview

The company has operations in Country A, Country B and Country C that offers treatment for acute and
chronic diseases in primary, secondary and tertiary care sectors

Specializes in 50 specialties comprising cardiac sciences, oncology, radiology and imaging,


Services

gastroenterology, neurosciences, orthopedics, critical care services and in minimally invasive surgeries
and transplantation

Operates retail pharmacy outlets all across the country

LOGISTICS MARKET IN CHINA 2014.PPT

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Public: Domestic Company Company 1 SWOT Analysis


(5/5)

SAMPLE
S

LOGISTICS MARKET IN CHINA 2014.PPT

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Thank you for the attention


Logistics Market China report is part of Netscribes Automotive and Logistics Industry Series.
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Phone:
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LOGISTICS MARKET IN CHINA 2014.PPT

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