Snapshot: Charting CH Robinson's (reportedly Mærsk-led) M&A reaction
If only it were so simple
With the US-China trade war showing no sign of abating, CH Robinson is setting its sights on China’s booming import market.
The 3PL already controls some 364,000 teu of Chinese eexport transpacific traffic to the US, making it the largest non-vessel operator (NVO) on the tradelane.
However, according to John Chen, vice-president of CH Robinson Asia Global Forwarding, the company is keen to increase volumes tied to China’s ballooning import market, which is expected to see double-digit growth until 2023.
“Import growth in China continues to outpace exports and, by leveraging our vast network and core service offerings, we aim to deliver competitive advantages to customers around the world,” he said.
Defenders of Chinese trade policy highlighted the China International Import Expo (CIIE), held in Shanghai for the first time this month, as a demonstration of the country’s willingness to increase market access and overseas orders.
The show earned plenty of headlines, with e-commerce giants Alibaba, JD.com and Kaola.com all inking big purchase contracts. Alibaba’s spending was the biggest, announcing orders with 120 countries for $200bn of foreign goods, including a $1.5bn beef order with Brazil’s JBS, the largest ever between the two countries.
“Import tariffs continue to reduce substantially this year,” added Mr Chen. “Customs and IQ [inspection and quarantine] were recently merged to simplify import procedures and lower costs; and stricter export commodity inspection was launched for intellectual property rights protection.”
These measures, he said, would see “massive import growth” in the automotive, pharmaceutical and FMCG industries.
“This is expected to benefit European countries the most, while ASEAN and Latin America may profit from transferred import orders from the US.”
China’s seemingly insatiable appetite for online shopping is already impacting inbound logistics operations, particularly for air cargo.
For example, Mr Chen said, November’s record-breaking Singles’ Day shopping festival – Alibaba alone registering $30.8bn in sales – saw the major players “preparing to do battle” by starting to stock up two months earlier, in September. Cross-border transactions represent an increasing share of the shopping, adding to peak season capacity constraints.
CH Robinson manages peak season capacity by utilising hubs in Hong Kong and Shanghai, connecting its entire Asian network.
“And we signed year-round block space agreements (BSAs) with key airlines, which helped secure steady capacity for our customers,” explained Mr Chen. “There’s at least a 30% increase, year on year, on our capacity through these BSAs. Even during peak season, airlines are willing to offer extra capacity for greater flexibility for our air freight through their split charter programmes.”
He said China’s e-commerce revolution was playing a leading role in accelerating supply chain development, as well as helping the government’s loosening regulatory policy.
“Cross-border e-commerce imports have broken the monopoly of import sales agents, giving public access to high-quality and lower-priced imported consumer goods while forcing low-quality Chinese manufacturers to close down.
“This ultimately helped push the evolution of the entire supply chain, as well as deregulated government policies,” Mr Chen added.