Chinese stimulus plan – defend and spend
Don’t burst the bubble…
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CHRW: RUNNING HIGHMAERSK: STRONG HON: BREAK-UP APPEALCHRW: CLOSING QUESTIONSCHRW: HEADCOUNT RISK MID-TERM CHRW: SHOOTING UPCHRW: OPPORTUNISTIC CHRW: CFO REMARKSCHRW: GETTING THERE CHRW: SEEKING VALUABLE INSIGHTCHRW: 'FIT FAST AND FOCUSED' CHRW: INVESTOR DAY AMZN: NASDAQ RALLYKNIN: LOOKING DOWNPLD: FLIPPING ASSETSWTC: BOLT-ON DEAL
You could forgive industry veteran Jim Crane having a wry smile at the predicament private equity firm Apollo Global Management faces with CEVA Logistics.
As The Loadstar reported last week, Apollo is rumoured to be considering offloading all or part of the troubled CEVA, a company it created in 2007 after a hostile takeover bid resulted in it outbidding Crane to secure ownership of EGL, a logistics firm he had built from scratch.
Fast- forward to 2016 and, as Apollo looks to cut its losses, his new company, Crane Worldwide Logistics (CWL), is going from strength to strength – in eight years growing to more than $680m turnover from 113 locations in 25 countries.
CWL sees Asia as a key growth market and Chad Taylor, CWL founding member and Asia Pacific regional vice-president, told The Loadstar the company was looking to capitalise on Asia’s shifting trade and sourcing trends, particularly China’s so-called ‘Go West’ policy.
“We have seen some trends of movement from Go West, but mainly for those larger manufacturers which obtain government support,” said Mr Taylor.
He added: “The small- to medium-sized companies seem to continue to work with locations around the larger ports. Jiangsu Province, especially Nantong, seems to be taking advantage of lower labour costs and the improved road infrastructure to grow at a faster pace.
“I believe that China’s far west is just too difficult for the small and medium companies to manage the movement of their products, especially if they are intended for export.”
Mr Taylor said although many companies which use contract manufacturers are changing their focus from China to Vietnam and the Philippines, he hasn’t witnessed many factories closing and moving to south-east Asia.
“I think some of the free-trade agreements will need to be approved and proven, prior to many wanting to invest in expensive factory creation,” he explained.
CWL’s strategy in Asia has been to focus on high-service customers that require hands-on supply chain management, a segment they see as having great potential compared with chasing low-cost commodity-driven volumes.
One way to add value is investing in supply chain technology and providing enhanced visibility via data dissemination – a rapidly changing area which Mr Taylor claimed the giant 3PLs were incapable of adapting to fast enough.
“The world is demanding instantaneous information. The non-asset world of freight forwarding has somewhat been excused by the customer on this, due to the benefits of the flexible model that drives our operations, but this will continue to be challenged as their customers put on more pressure.
“The large and mature 3PLs have shown that they struggle to change systems globally in order to drive the visibility that is required.
“We have invested time, money and energy into our systems, to not only lead the industry but also to be able to transform into what the customers of the next decade want. We are listening to the next generation and will continue to work on a proactive push of pertinent information,” he said.
Meanwhile, with big data and new supply chain technology transforming how service providers offer last-mile delivery, will CWL be looking to capitalise on Asia’s booming e-commerce logistics market?
“It is an area we are interested in, but in many developing countries it probably is not the main target. These shipments are residential parcels, in most cases for final delivery. We can add more value by focusing on the pool distribution to parcel locations or consolidations at the origins.
“The models we are seeing are exciting and exact for e-commerce, but the financial contribution per shipment is small for a forwarder model,” Mr Taylor said.
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