Market Research Report : Logistics Market in China 2012

Logistics Market – China

February 2012

2LOGISTICS MARKET IN CHINA 2012.PPT

SAMPLE

Executive Summary

Market

Drivers & Challenges

Competition

Logistics market value in China is expected to reach USD x tr by 20‐‐, growing at a CAGR of z% from USD y bn in 20‐‐

Industrial products accounted for a major share of x% of the logistics market value in 20‐‐

Trends Development of National Transport Infrastructure Market Consolidation Logistics Outsourcing Inland Expansion of Third Party Logistics Rising Investments

Drivers:‐ Healthy Economy‐ Rising Income and Increasing Domestic Consumption‐ Growing E‐commerce Business‐ Manufacturers’ Shift to the West‐ Strong Retail Sales‐ Opportunity from Cold Chain Logistics‐ Opportunity from Pharmaceutical Logistics

Government Initiatives

Reorganization of Logistics‐Related Administrative Institutions in 20‐‐ Fragmented Regulatory Framework Rejuvenating Program for Logistics Industry (20‐ ‐‐20‐ ‐) Development Plan of Commercial Logistics (20‐ ‐) Logistics Key Focus Areas under the 12th Five Year Plan (20‐‐ ‐20‐ ‐)Medium‐and Long‐term Development Plan of Logistics Industry (20‐ ‐ ‐20‐ ‐)

Challenges:‐ Rise in Logistics Costs with Low Efficiency ‐ Lack of Modern Logistics Facilities‐ Inadequate Warehouse Space‐ Regional Protectionism‐ European Debt Crisis‐ Constraints in Human Resources‐ Preference towards Self Management

Established foreign companies including Company 1,Company 2, Company 3, andCompany 4; and Hong Kong based Company 5 in China’s Logistics Market, indicates more fierce competition for the domestic players

Key domestic players in the market include company 1, Company 2, Company 3, Company 4 and Company 5


SAMPLE

•Introduction

•Market Overview

•Drivers & Challenges

•Government Initiatives

• Trends

•Mergers & Acquisitions

•Competition

•Key Takeaways


SAMPLE

Logistics Industry Framework

Source:

X

a2

a3

a4

a5

b1

b2

b3b4

b5

c1

c2

c3

d1

d2

d3

d4

d6

a1

d5

A

B

C

D


SAMPLE

Integrated International Logistics Services

Type 1

Type 2

Type 7

Type 3

Type 6

Type 5

Type 4

Source:

XxXx


SAMPLE

China was ranked X based on the Logistics Performance Index

Country 3030Country 1515










20

19

18

17

16

Rank

Country 5

Country 4

Country 3

Country 2

Country 1

Economy

5

4

3

2

1

Rank

Country 20

Country 19

Country 18

Country 17

Country 16

Economy

Logistics Performance‐wise Rank (20‐‐)Logistics Performance Index

• Logistics performance of different economies has been measured by the World Bank, by using the Logistics Performance Index

• Logistics Performance Index (LPI) is the a countries score based on the weighted average of six chief criteria:

Efficiency of the clearance process

Quality of infrastructure associated with trade and transport

Ease of arranging competitively priced shipments

Capability and quality of logistics services

Ability to track and trace consignments

Efficiency in delivery time

• In 20‐‐, among the x evaluated economies, China ranked y

• However, China topped amongst the lower‐middle income countries

Developed economies or high income countries, such as X led the index, followed by Y and Z

Source:


SAMPLE

Logistics market in China, exhibiting rapid development with annual double digit growth through 20‐‐

• Logistics industry acting as a bridge between the value chain from production to sales, plays a key role in China’s smooth economic development Logistics market value is expected to reach USD x tr in 20‐‐, growing at a CAGR of y% during 20‐‐‐ ‐‐

•Higher logistics demand coefficient indicates bigger logistics market In 20‐‐, logistics market growth slowed down with y‐o‐ygrowth rate reduced to x% from y% achieved in 20‐‐, due to global financial crisis

However, logistics demand coefficient was x in 2010, up from y in 2009 and logistics market value reached a record high of USD z tr in 20‐‐, up by y % y‐o‐y, exhibiting a phenomenal recovery from the global financial crisis

Industrial products accounted for a massive share of z% of the total logistics value in 20‐‐, followed by the imported and agricultural products with x% and y% respectively

Logistics Market Value and GrowthLogistics Market – Overview

Source:

35.631.2

27.424.0

21.118.5

14.313.311.1

8.87.1

0

10

20

30

40

USD tr

20‐‐

Z%

20‐‐e20‐‐e20‐‐e20‐‐e20‐‐e20‐‐20‐‐20‐‐20‐‐20‐‐

Logistics Market Value Category‐wise(20‐‐)

E1%D1%C1%

B1%

A1%

E

D

C

B

A


SAMPLE

Growth in logistics value‐added along with its consistent share in GDP and …

Logistics Value‐Added (1/2)

Source: China Federation of Logistics and Purchasing; Li Fung Group

• Steadily increasing logistics value‐added, denotes a growing logistics market over the time period

20‐‐‐‐‐

•Higher logistics value added signifies bigger logistics market

Logistics value added is expected to grow at a CAGR of x% during the five year period 20‐‐‐‐‐ amounting to

USD ybn by 20‐‐

Note: 2010 Exchange Rate has been used for all conversions

Growth of Logistics Value‐Added

0

500

1,000

USD bn

Y%

X%

20‐‐e

x11

20‐‐e

x10

20‐‐e

x9

20‐‐e

x8

20‐‐e

x7

20‐‐

x6

20‐‐

x5

20‐‐

x4

20‐‐

x3

20‐‐

x2

20‐‐

x1


SAMPLE

…tertiary industry indicates the expansion of logistics market in China

Logistics Value‐Added (1/2)

Source:

• Total logistics value‐added reached USDx bn, representing y% of the GDP in 20‐‐, growing at a

CAGR of z%, from USD y bn, representing x% share of the GDP in 20‐‐

• Logistics sector has managed to grow as fast as the tertiary market and the national economy as

there has been a stable growth in the share of the total value‐added of the logistics industry in

both China’s tertiary industry and GDP, during 20‐‐‐‐‐

y5

y4

y3

y2

y1

Y‐O‐Y Growth(%)

a5z5x520‐‐

x4

x3

x2

x1

Total Value‐Added (USD bn)

z4

z3

z2

z1

Share in the Tertiary Industry (%)

a420‐‐

a320‐‐

a220‐‐

a120‐‐

Share in GDP(%)Year


SAMPLE

Drivers & Challenges – Summary

Opportunity from Pharmaceutical Logistics

Drivers

Healthy Economy

Rising Income and Increasing Domestic Consumption

Growing E‐commerce Business

Manufacturers Shift to the West

Strong Retail Sales

Opportunity from Cold Chain Logistics

European Debt Crisis

Constraints in Human Resources

Self Management Mentality

Challenges

Rise in Logistics Costs with Low Efficiency

Lack of Modern Logistics Facilities

Inadequate Warehouse Space

Regional Protectionism


SAMPLE

Impact

Growth of GDP Growth of Foreign‐exchange Reserves

Powerful Chinese economy serves to build a strong foundation for the logistics sector

Healthy Economy

Source:

0

2,000

4,000

6,000

8,000

10,000 X%

20‐‐e

x4

20‐‐e

x3

20‐‐

x2

20‐‐

x1

USD bn

• Finding 1

• Finding 2

• Finding 3

0

1,000

2,000

3,000

4,000

USD bn

Y%

20‐‐

y4

20‐‐

y3

20‐‐

y2

20‐‐

y1


SAMPLE

Impact

Urban Disposable Income (per household) Urban Consumer Spending

Rising income coupled with increasing consumption will aggravate the country’s logistics requirement

Rising Income and Increasing Domestic Consumption

• Finding 1

• Finding 2

• Finding 3

• Finding 4

Source: i‐Newswire; PWC

Higher logistics requirementsRising Income

Increasing Domestic Consumption

0

5,000

10,000

15,000

20,000

USD bn

X%

20‐‐e

x3

20‐‐e

x2

20‐‐

x1

0

1,000

2,000

3,000

4,000

5,000

USD bn

Y%

20‐‐‐e

y3

20‐‐e

y2

20‐‐

y1


SAMPLE

Impact

Rise in E‐commerce Cost Structure Per Parcel

Rise in e‐commerce has augmented the domestic demand for improved logistics

Growing E‐commerce Business

• Finding 1

• Finding 2

Source:

0

500

1,000

1,500

2,000

2,500

3,000

USD bn

X%

20‐‐e

x7

20‐‐e

x6

20‐‐e

x5

20‐‐e

x4

20‐‐e

x3

20‐‐

x2

20‐‐

x1

C1 D12011 A1 B1

A B C D


SAMPLE

Impact

Movement of manufacturing hubs to the West, provides significant growth opportunity for logistics market

Manufacturers Shift to the West

• Finding 1

• Finding 2

ShanghaiNingbo

Shenyang

Tianjin

Beijing

Dalian

JinanJinanQingdao

Lianyungang

TaiyuanTaiyuan

XianXian

Chengdu

Chongqing

Beijing

Kunming

Chongqing

ShenzhenGuangzhou

Foshan

Xiamen

Wuhan

Nanjing

Hangzhou

A

B

C

D

E

F

Major manufacturing, consumption and distribution hubs


SAMPLE

Impact

Annual Retail Sales of Consumer Goods

Growing retail sales add to the rising demand for logistics in the country

Strong Retail Sales

Source:

• Finding 1

Methodology adopted by the retailers to tackle the logistics issue can be a key differentiator among competitorsMethodology adopted by the retailers to tackle the logistics issue can be a key differentiator among competitors

• Type 5

• Type 4

• Type 3

• Type 1

• Type 2

• Point 1

• Point 2

0

1,000

2,000

3,000

17.1%

20‐‐

Y

y1

y2

20‐‐

X

x1

x2

BA


SAMPLE

Impact

Underdeveloped cold chain logistics provides significant opportunity for further growth

Opportunity for Cold Chain Logistics

• Finding 1

• Finding 2

• Finding 3

Source:

DescriptionDate

•Point 3Apr 20‐‐

•Point 1•Point 2

Jan 20‐‐

Foreign Investors are Attracted by The Enormous Growth Potential of Domestic Cold Chain Logistics Market

ChinaY%

USAX%

Cold Chain Service Demand & Supply Gap

Point 1


SAMPLE

Impact

Pharmaceutical logistics is expected to grow with the growth of Chinese pharmaceutical market

Opportunity for Pharmaceutical Logistics

• Finding 1

• Finding 2

Source:

• Point 1

• Point 2

Government’s support for the development of modern pharmaceutical logistics

• Point 1• Point 2• Point 3

China is being considered as an emerging market, driving up demand for Western drugs

Growth of Pharmaceutical Market

0

50

100

150

200

USD bn

X%

20‐‐

x3

20‐‐

x2

Mar20‐‐

x1


SAMPLE

Impact

Rise in transportation fees, fuel costs and labor costs coupled with…

•Finding 1

• Finding 2

• Finding 3

• Finding 4

Source:

Rise in Logistics Cost Ratio of Total Logistics Cost to GDP (20‐‐)

Rise in Logistics Costs with Low Efficiency (1/2)

0

200

400

600

800

1,000

1,200

USD bnX%

Jan‐Oct 20‐‐

x3

20‐‐

x2

20‐‐

x1

0

5

10

15

20

%

Country 2

x2

Country 1

x1


SAMPLE

…low efficiency is a major challenge to the logistics market

Rise in Logistics Costs with Low Efficiency (2/2)

• Finding 1

Source:x4B2

x3B1B

x2A2

x1A1A

Y‐O‐Y Growth (Jan‐Oct 20‐‐)Sub‐CategoryCategory

Share in Total Logistics Cost Increase in Transportation Fees

Point 1

0

20

40

60

80

100 a5

20‐‐

c4

b4

a4

20‐‐

c3

b3

a3

20‐‐

c2

b2

a2

20‐‐

c1

b1

a113

%

20‐‐

c5

b5

CBA

0

200

400

600

USD bn15.6%

20‐‐

x2

20‐‐

x1


SAMPLE

Impact

Lack of modern logistics facilities is a huge set back for the logistics sector

Lack of Modern Logistics Facilities

• Finding 1

• Finding 2

• Finding 3

Source:

Point 1

Cause•Effect 1•Effect 2

Limited Supply of Modern Logistics Space (20‐‐)

0

200

400

600X

a1

b1

sq m

20‐‐

A B


SAMPLE

Impact

European debt crisis hinders China’s overall growth, hampering logistics escalation

Debt Crisis in Europe

• Finding 1

• Finding 2

• Finding 3

• Finding 4

Source:

• Point 1

• Point 2

Decline in New Export Order Sub‐Index

Point 3Point 3

0

20

40

60X%

Feb 20‐‐

x2

Jan 20‐‐

x1


SAMPLE

SAMPLE

Government has implemented certain measures to reorganize the regulatory structure of the logistics industry

•Finding 1

• Finding 2

Reorganization of Logistics‐Related Administrative Institutions in 20‐‐

Source:

x1

x2

x3

X

y1

y2

YZ


SAMPLE

Government has issued new guidelines to solve the long‐term problems in the logistics industry

A1

C1

B1

E1

D1

F1

G1

H1

Target set by NDRC and CFLP by 20‐‐

Logistics Key Focus Areas under the 12th Five Year Plan (20‐‐‐20‐‐)

Source:

Z%X3

Y%

CAGR

X%

X2

X1

Category

J1


SAMPLE

Government’s future plans for the development of logistics industry

Medium‐and Long‐term Development Plan of Logistics Industry (20‐‐‐20‐‐)

Source: Li Fung Group

• Finding 1

• Finding 2

• Finding 3

D

C

B

A


SAMPLE

BOTTLED WATER MARKET IN CHINA 2011.PPT

Trends – Summary

Development of National Transport Infrastructure

Inland Expansion of 3PLs Logistics Outsourcing

Market ConsolidationRising Investments

Key

Trends


SAMPLE

0

10

20

30

40

50

60

70

80

90

100

110

120

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000Revenue

d1

c1b1

a1

Net Income

Major Domestic Public Companies – Summary (1/2)

Source:

Size of the Bubble represents Market Capitalization in USD mn

Company 4Company 3Company 2Company 1


SAMPLE

Source:

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

USD mn

Company 4y4

x4

Company 3y3

x3

Company 2y2

x2

Company 1y1

x1

X Y

Total Income and Profit for Major Domestic Companies of 2010

Major Domestic Public Companies – Summary (2/2)


SAMPLE

Key People

Products and Services

Company Information Locations – China

Designation 4Person 4,

Name Designation

Person 1 Designation 1



Source:

‐‐‐‐Stock Exchange

Corporate Address City 1, Country 1

Tel No. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Fax No. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Website

Year of Incorporation 20‐‐

Ticker Symbol ‐‐‐‐

Domestic Company – Company 1

ProductCategory 5

ProductCategory 4

ProductCategory 3

ProductCategory 2

Category Products/Services

Category 1 Product

HeadquarterOther Offices


SAMPLE

Financial Snapshot Key Ratios

Financial Summary

• The company incurred a net profit of USD x1 mn in FY 20‐‐, as compared to net profit of USD x2 mn in FY 20‐‐

• The company reported total Income of USD y1 mn in FY 20‐‐, registering an increase of y% over FY 20‐‐

• The company earned an operating margin of x% in FY 20‐‐ an increase ofz percentage points over FY 20‐‐

• The company reported debt to equity ratio of y1 in FY 20‐‐, a decrease of x% over FY 20‐‐

Financial Summary

Profit / Loss

Revenue

0

200

400

600

0

10

20

30

ProfitUSD mn

RevenueUSD mn

20‐‐

x4

20‐‐

x3

20‐‐

x2

20‐‐

x1

Indicators Value (dd/mm/yy)Market Capitalization (USD) ‐‐Total Enterprise Value (USD) ‐‐EPS (USD) ‐‐PE Ratio (Absolute) ‐

Particulars y‐o‐ychange

(2010‐09)2010 2009 2008 2007

Profitability RatiosOperating 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 RatiosOperating costs (% of Sales) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐Administration costs (% of Sales)

‐‐ ‐‐ ‐‐ ‐‐ ‐‐‐

Interest costs (% of Sales) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐‐

Liquidity Ratios ‐‐

Current Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐Cash Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐‐

Leverage RatiosDebt to Equity Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Debt to Capital Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Interest Coverage Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Efficiency RatiosFixed Asset Turnover ‐‐ ‐‐ ‐‐‐ ‐‐‐ ‐‐Asset Turnover ‐‐ ‐‐ ‐‐‐ ‐‐‐ ‐‐Current Asset Turnover ‐‐ ‐‐ ‐‐‐ ‐‐‐ ‐‐Working Capital Turnover ‐‐ ‐‐ ‐‐‐ ‐‐ ‐‐

Capital Employed Turnover ‐‐ ‐‐ ‐‐‐ ‐‐ ‐‐

Source:



SAMPLE

Source:

Key Business Segments Key Geographic Segments

Key Recent Developments

0%

20%

40%

60%

80%

100%

20‐‐

c4

b4 d4

20‐‐

c3

b3 d3

20‐‐

c2

b2

20‐‐

a1

A D B C

Description News

Overview

• Company 1 was formerly known as Company 2. and had changed its name in Jun 20‐‐ Company provides integrated logistics services in the Country 1

– Milk‐run service covers more than x suppliers in the areas of A, B, C, D, E and F, with annual output of over y TEU– International freight forwarding services has an annual output exceeding zTEU– Company owns x vessels to handle bulk cargo with capacity of more than y ton and annual transportation capacity by

railway exceeds z ton– Company has x sophisticated distribution centers for supply parts, with a total warehousing space of more than y sq m

Company delivers within x to y days to over z large and medium sized cities and within z days to over x county‐level cities all over Country 1


0%

20%

40%

60%

80%

100%

20‐‐

Country 1


SAMPLE

Logistics market is expected to grow at a CAGR of X% to reach USD y tn by 20‐‐

Logistics industry has become a leading industry in China's national economy and is playing a guiding and supporting role in the overall national economic situation

Healthy economy coupled

with rising income and

increasing domestic

consumption act as a driver

for the growing demand of

logistics in the country

Opportunities in the Market

Market Size Government Initiatives

Challenges

Government has been taking some major initiatives for the development of the logistics sector

Growing e‐commerce

business and relocation of

manufacturers to the west

provides opportunity for

growth in the logistics sector

Growing retail sales,

opportunity from cold chain

and pharmaceutical logistics

tender prospects for future

growth

• Rise in Logistics Costs with Low Efficiency • Lack of Modern Logistics Facilities• Inadequate Warehouse Space• Regional Protectionism• European Debt Crisis• Constraints in Human Resources• Inclination towards Self Management

However, presence of multiple government bodies associated with the jurisdiction of the logistics sector, creates high‐level coordination failure

Government has issued new guidelines to solve the long‐term problems in the logistics industry via its 12th Five Year Plan and medium and long‐term development plans

0

10

20

30

40

20‐‐e

USD tn

20‐‐

x8X%

20‐‐e 20‐‐e20‐‐e 20‐‐e

x10x9

x7

x11

x6

20‐‐

x5

20‐‐

x4

20‐‐

x3

20‐‐

x2

20‐‐

x1


Thank you for the attention

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Market Research Report : Logistics Market in China 2012