ATK中远项目建议书（英文PPT97 98页

July,2001COSCOIPOSUPPORTMATERIALSLogisticsServicesIndustryEnvironment&TrendAnalysis-COSCOCommentsandA.T.KearneyRemarksThecontentsofthisdocumentwerepreparedbyA.T.Kearneyandmaynotbeused,alteredordisclosedtootherparties,withoutthewrittenpermissionofA.T.Kearney.TheinformationcontainedinthisdocumenthasbeenobtainedfromexternalsourceswhichA.T.Kearneybelievesarereliable.However,A.T.Kearneycanmakenorepresentationastotheaccuracyorcompletenessoftheinformationorprojectionsderivedtherefrom. TableofContentsExecutiveSummaryMarketSize&GrowthGlobalChinaServiceDemandGlobalTrendsChinaTrendsCompetitiveEnvironmentGlobalChinaRegulatoryEnvironmentInformationTechnologyAppendix ExecutiveSummary A.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%overthenextfiveyears TheChinalogisticsindustrywillbeshapedbyChina’sentryintotheWTOandthesubsequentopeningofthemarkettoforeigncompetitionIndustryScenario2006RapidincreaseinM&AactivitiesKeyalliancesformedwithinthenext2-3yearsRapidexpansionofglobalplayersofferingsophisticatedend-to-endsolution,includinglogistics,transportationandITImplementationofe-commerceinitiativesandincreasingdependenceonITnetworkMergers,AcquisitionsandAlliancesGlobalCompetitorsTechnologyThelogisticsmarketwillgrowrapidlyCompetitiveintensitywilldramaticallyincreaseWTOEntrySource:A.T.Kearney 1.MarketSize&Growth ThegloballogisticsservicesmarketreachedanestimatedUS$190Bnin2000ThegloballogisticsoutsourcingmarketisestimatedtoUS$190Bnin2000ThetransportationandrelatedexpendituresmarketreachedanestimatedUS$3.8Trillionin2000,andisexpectedtogrowatanannualrateof2.3%overthenext5yearsTheAsianlogisticsoutsourcingmarketisestimatedtoreachUS$31Bnin2001andisexpectedtogrowatCAGR39%overthenextfiveyearsThegreatestopportunitiesforoutsourcingareintransport,warehousing,andtransportmanagementThegrowthofthegloballogisticsservicesindustryismainlydrivenbyshippers’propensitytooutsourcelogisticsservicesandorganictransportationmarketgrowthCustomerelectronics,automotiveandapparelrepresentthemostattractiveopportunitiesforlogisticsservicesinChina TheChinamarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyatCAGR35%overthenextfiveyearsTheChinalogisticsservicesmarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyoverthenext5yearsThelogisticsservicesindustryisstillatanearlystageofevolutioninChinaThetransportationandrelatedexpendituresareproportionatelyhigherinChinathaninmostdevelopedcountriesandNIEs-indicatingamajorimprovementopportunityInCoastalChina,demandforlogisticsservicesisexpectedtobestronginGuangdongandShanghaiInInlandChina,thelargestdemandpotentialisinSichuanandtheHubei/YangtzeriverregionGrowthinthelogisticsservicesindustryinChinawillmainlybedrivenbycontinuedmacroeconomicgrowthandincreasedpropensitytooutsourcelogisticsFavorablemacroeconomicoutlookPublicpolicyandspendingIncreasinginterestinoutsourcingforlogisticsneedsGrowingITandE-business MarketSize&Growth-Global ThegloballogisticsoutsourcingmarketisestimatedtoUS$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$190BnGlobaltransportationandrelatedexpendituresGlobaloutsourcedtransportationandrelatedservicesGloballogisticsoutsourcingmarket US$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$152BnCAGR2000-2006 TheAsianlogisticsoutsourcingmarketisestimatedtoreachUS$31Bnin2001andisexpectedtogrowatCAGR39%overthenextfiveyearsNote:AsiaincludesChina,Japan,HonkKong,Korea,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyAnalysisLogisticsOutsourcingMarketinAsia-GrossRevenue(US$Bn)CAGR(99-01)=38%CAGR(01-06)=39% Thegreatestopportunitiesforoutsourcingareintransport,warehousing,andtransportmanagementTransportWarehousingTransportManagementITSupplementaryLogisticServicesPurchaseOrderManagementLogisticsManagement30%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’propensitytooutsourcelogisticsservicesandorganictransportationmarketgrowth Consumerelectronics,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&MaterialsFurnitureMachineryAddmarketandtrendsanalysisbyindustry MarketSize&Growth-China TheChinalogisticsservicesmarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyoverthenext5yearsLogisticsOutsourcingMarket-GrossRevenue(2000,US$Bn)Note:AsiaincludesChina,Japan,HongKong,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyEstimatesCAGR=35%190230.61ChinaLogisticsServiceMarket(US$,Bn) ThelogisticsservicesindustryisstillatanearlystageofevolutioninChinaCharacteristicsEmergingdemandforoutsourcedlogisticsservicesLowvalueaddedservicessuchastransportandwarehousingarethemajortypeofservicesoutsourcedTraditionalin-housebehaviourbeingimpactedFastgrowthoflogisticsuserbaseandhigherrequirementforbroaderservicesLargenumberofservicesproviderscompetingforcustomersandhumanresourcesMosthighvalueaddedservicesarefreeandprovidedassellingpointsLogisticsoutsourcingbecomescommonpracticeandanimportantleverforcompetitionConsolidatedservicemarketwithafewestablishedmarketleadersLogisticspenetrateinsupplychainandreplacetraditionalbusinessmodelsGloballogisticsintegratorsprovideone-stopsolutionworldwideSpecializationandclosecooperationamonggloballogisticsserviceprovidersOptimizedallocationandintegrationofresourcesalongthesupplychainStageEmergenceGrowthPenetrationGlobalizationWorldLeading(US)ChinaTodaySource:A.T.Kearney WarehousingandDistributionTruckingRailFreightAlthoughHeavilyUsed,RailwayFreightHasLongTransitTimesandServiceReliabilityIsPoorRailwayContainersAreNotCompatibleWithShippingCompanyContainersAirlineCustomsBrokerageCourierLimitedPresenceofForeignFirmsAsJVE.G.DHLSinotransRegionalSegregationinOperationLogisticsCenterandFreightForwardingShippingThedomesticwarehousingmarketiscurrentlysmallandover-suppliedwithbasicwarehousesprovidingvirtuallynovalue-addedservicesSomeconsolidationjuststartedamongthelargewarehousingcompaniesRivertransportationhasdeclinedMostvesselsarecharacterizedbylowspeedandhighenergycostsTruckingcompaniesareonlyallowedtooperateinrestrictedregionsGovernmenthasestablished15FreeTradeZonesandsomelogisticscentersaresetupthereInlandtransportationishandledbydomesticfreightforwarderwhoisusuallysub-contractedbytheinternationalfreightforwarderSevendomesticairlinesdominateregionaloperationsDesignatedforeigncarriersaregivenamaximumentitlementof50tonnesperweekManycustomsclearingbrokeragefirmsandconsiderableconfusionaboutrolesCustomsclearingprocedurestookatleast½-1daypreviouslybutexpectedtobeshortenedto1hourThelogisticsservicesindustryisstillatanearlystageofevolutioninChina(continued)Source:A.T.KearneyAnalysisChinaLogisticsServices TransportationandrelatedexpendituresareproportionatelyhigherinChinathaninmostdevelopedcountriesandNIEs–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-addedproductsnospecialrequirementforlogisticsquality;Roadtransportationisconvenient,oftencontainerizedinfactorytoreducecostlessneedforwarehousing/consolidationElectronicsindustryisboominginDongguan,whichhassomeleadingcompanieslikeHuaweipotentiallargeprofitablecustomersStrongWeakShanghai(Jiangsu,Zhejiang)5Shanghaiisthefastgrowingeconomic/financialcenterinChina,whichhassomemajorMNCssuchasSGM,Acer,Philips,etc.Theyarematuredcustomersoflogisticsservicesandlesspricesensitive.Ontheotherhand,togetthedealsfromthemusuallyneedstoinvolvehighlevelnegociationLargecompaniesinShanghaiandnearbyareasaremainlyJVsofautomobileandconsumerelectronicsindustry,whichhavehighproductvalueandlowerpricesensitivitySource:A.T.Kearneyfieldinterviewsandanalysis DemandSizeSichuan(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,canbeapotentialdevelopmentarea3 GrowthinthelogisticsservicesindustryinChinawillmainlybedrivenbycontinuedmacroeconomicgrowthandincreasedpropensitytooutsourcelogisticsGrowthDriverImplicationTheChineseeconomyisexpectedtogrowatCAGR7%overthenextfiveyears.IncreasedinternationalanddomestictradewilldrivedemandforlogisticsservicesPublicpolicyandspendingsupportsimprovementsinChina’slogisticsinfrastructure,providingopportunitiesforfurtherexpansionoflogisticsserviceproviders.Capableforeignserviceprovidersarelimitedinbusinessscopebyregulation,andtheirfullentryafterWTOwilldrivetheindustrytowardinternationalbestpracticesThereisincreasinginterestamongChina-basedenterprisesinoutsourcingforlogisticsservices.OverseasbusinessesareextendingtheirsupplychainsdeeperintoChinaThefastgrowingmarketinonlineB2BtransactionsprovidesanadditionalmarketsegmentforlogisticsservicesFavorableGrowthOutlookfortheChinaLogisticsServicesIndustryFavorableMacroEconomicOutlookPublicPolicyandSpendingIncreasingInterestinOutsourcingforLogisticsNeedsGrowingITandE-Business1234Source:A.T.KearneyAnalysis TheChineseeconomyisexpectedtogrowatCAGR7%overthenextfiveyearsSource:Chinainfobank,A.T.KearneyAnalysisProjectionofChina’sGDPGrowthandStructure(RMB,Bn)ContinuousgrowthinGDPindicatesarobustandfastgrowingmacroeconomy,providingopportunitiesforsophisticatedlogisticsserviceprovidersTheeconomicstructurewillbecontinuouslyoptimizedandupgradedLogisticsisdirectlycorrelatedwiththemanufacturingindustry,thereforegrowthofsecondaryindustrieswillleadtothegrowthoflogisticsservicesImprovedservicesindustrieswillalsohaveapositiveimpactonthelogisticssectorImprovedsupportiveservicessuchaslegal,accounting,etc.ImprovedtelecommunicationcapabilitiesRemarksSecondary:7%Tertiary:9%CAGR(01-06)Total:7%Primary:3%13,3679,560FavorableMacroEconomicOutlook1 DemandforlogisticsservicescomesfrombothinternationalanddomestictradeSource:HongKongTradeDevelopmentCouncilResearch;ChinainfobankDemandforLogisticsServicesMoreInternationalTradeMoreDomesticTradeInternationaltradeInternationaltradehassustainedtheglobaleconomicfluctuationandkeptfastgrowinginthepast5yearsItisprojectedtogrowataCAGRof7.5%,withtotaltradevaluereachingUS$680Bnin2005ExportsExpectedtorisebyanadditional2.4%peryearoverthefirstfiveyearsofWTOentryShareasworldexportsisprojectedtorisefromcurrent3.5%to7.3%in2005ImportsProjectedriseofUS$21.3BnafterWTOProjectedannualgrowthratewillbemarginallyfasterthanexportDomesticTradeCAGRofretailsalesofconsumergoodsinthe“Ninth5Year”was11%PositiveoutlookduetocontinuouslygrowingpurchasingpowerDevelopmentofchainstoresSalesrevenueofchainstorecorporationshasexperiencedoubledigitrisefrom1997MultinationalchainstoreshavebeenaggressivelyimprovingtheirpresenceinChinamarketInter-citytradeCurrentlymorethan50%oftheforeignindustrialandretailfirmsdistributedtheirproductsinmorethan50citiesInter-citytradewillbefrequentafterWTOFavorableMacroEconomicOutlook1 TheStateEconomicandTradeCommissionhasestablishedamasterplanfordevelopinglogisticsservicesinChinaStateEconomicandTradeCommissionLogisticsIndustryTradePlan30PilotCentersInter-regionalNetworksSupplyChainSystemsSelectsuitableenterprisesinvariouskeycitiestoestablish30pilotlogisticsanddistributioncenters10NationalEnterprisesAbout10specializedkeyenterpriseswithnationallogisticsanddistributionnetworkswillbedevelopedRealignassetstoforminter-regional,inter-sectorandinter-ownershiplogisticsanddistributionnetworksEffortswillbemadetoexplorethepossibilityofusing3PLanddistributionenterprisestobuildsupplychainsystems,andtobringfacilitiesandservicesoflogisticscompaniesclosertoadvancedinternationalstandardsPublicPolicyandSpending2 AwidearrayofgovernmentsupportedlogisticsinfrastructuredevelopmentprogramsareunderwayacrossChinaSource: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)IncreasingInterestinOutsourcingforLogisticsNeeds3 China-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.=0.82IncreasingInterestinOutsourcingforLogisticsNeeds3Low OnlinetransactionsprovidesanadditionalsourceofgrowthforlogisticsservicesSource: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.tradeconsultingCurrentIndustryInitiatives 2.ServiceDemand Customersareincreasinglydemandinghighvaluelogisticsservicesolutions,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,possiblyindicatinglowexpectations ServiceDemand-GlobalTrends Traditionally,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-tenReasonsCompaniesOutsourceLogistics Today,customersareincreasinglydemandingmoreadvancedservicesandend-to-endsolutions,suchassupplychainintegration733333333475353536666667373808087LaborCostSavingsTransportationCostSavingsAccesstoSkillsFreedomtoFocusonCoreCompetenciesCapitalAssetFlexibilityBalanceSheetReliefProjectManagementandStartUpImprovedCustomerServiceInventoryCostReductionAccesstoInformationSystemsSystemsIntegrationCycleTimeReductionGlobalAccessSupplyChainIntegrationFacilitationSupplyChainIntegrationImplementationFreedomFromRegulationOtherPastServiceDemandCurrentServiceDemand%Respondents3242637453899510010010010074849510010095%RespondentsExpectedFutureServiceDemand%Respondents20339393100536666736666465373666660Source:A.T.Kearney1998LogisticsSurvey “Demand-Pull”logisticsrequiresthelogisticsserviceproviderstobeflexibleandto“control”alargepartortheentiresupplychainSuppliersManufacturingDemandindirectlydrivesmanufacturingvolumethroughforecastsWarehouseWholesale/Retail“Supply-push”LogisticsChainSuppliersB2BExchangeManufacturingDirectDelivery“Demand-pull”LogisticsChainManufacturingdrivenbyactualdemandTherateofsupplywassetbythemanufacturerinadvance,basedonexpecteddemandItwastheroleofthelogisticsproviderstoensureajust-in-timesupplyofcomponentsTherateofmanufactureisdeterminedonareal-timebasisbytherateofdemandWhilethismodelismoreefficient,itrequiresperfectintegrationofalllogisticsoperationswithinoneprocessSource:LehmanBrothers,A.T.KearneyAnalysis Leadinglogisticsserviceprovidersaredevelopinglogisticsone-stop-shops-fromrawmaterialsourcingtodeliveryoffinishedgoodsRawMaterialsSourcingProductionPlanningFactorySourcingManufacturingControlQualityAssuranceExportDocumentationShippingCustomerOrderPlacementReceiptofFinishedGoodsSource:A.T.KearneyFinancematerialsFinanceproductionArrangepaymentfortransportationFinancingPurchaserawmaterials:fabricandtrimSelectfactorieswiththerequiredskills,specialtyorcapacitySourcingCoordinateproductiontransportationConsolidateandshipgoodstocustomersPrepareimport/exportdocumentationProvideshipmenttrackingLogisticsServicesArrangeandschedulematerialsdeliveryCreateandmanageproductionschedulesEnsurequalityProvidetrackingSupplyChainManagementFullServiceProvisioningKeyCapabilities Customersareincreasinglyinterestedincontractswithbothfixedandvariablepricingschemes-basedonrisksharingNote:(1)17respondentsSource:A.T.Kearney19983PLsurveyTypeofPricingSchemesinLogisticsContracts(1)-GlobalTrendinPricingSchemesCost-PlusMixtureofFixed/VariableOthersTransactionPercentofRespondentsTransaction Theopportunityforrisk-sharingcontractsisconsideredtobegreatestintransportationandinventorymanagementMainHurdlesforRisk-sharingContractsIdentifyingBaseline/BenchmarksEnforcement/Commitment/WillingnessonPartofCustomerSelectingMetricsandMeasuresConcernaboutOut-YearsScopeLimitorExpansionAgreeingonTargetsandWhenTheyAreMetSource:A.T.Kearney19983PLsurveyRisk-sharingOpportunityLargeOpportunityMediumOpportunitySmallOpportunityNoOpinion ServiceDemand-ChinaTrends IntheChinamarket,logisticsdemandisstillcomposedofbasicservices,suchastransportationandwarehousingNote:(1)SurveybytheChinaWarehouseAssociation(2000and2001)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource:Chinainfobank,ChinaWarehouseAssociateLogisticsServicesOutsourcedbyManufacturers(2000)LogisticsServicesOutsourcedbyDistributors(2000) Goingforward,demandforlogisticsservicesinChinawillmainlycomefromTransportation/Distribution,Warehousing/Consolidation…Warehousing/ConsolidationTransportation/DistributionPurchasing/Manufacturing133In-houseTruckcompaniesMORCOSCOChinaPostPortbureausHaier,TCLMaersk,APL,P&OIn-housePurchaseordermanagementVendorscreeningandmanagementTruckContainertowingRailBargeStorageInventorycontrolSorting/LabelingPackaging/UnpackingConsolidation/DeconsolidationPurchaseordermanagementandvendorscreeningaretheleastdemandedserviceswithlessthan5%intervieweesindicatinginterest.Manufacturersgenerallydon"tfeelcomfortableallowingoutsideserviceproviderstogetinvolvedinkeydecisionslikepurchasing,sourcing,etc.RailwayislargelyMORmonopoly,andsomelargecompanieslikeCOSCOandSinotranshaveunittrainswhichhavelowerpricesbetterservicelevelsTruckingmarket,includingcontainertowing,isveryfragmented.Currentsupplyexceedsdemand,resultinginpricecompetitionandthetrendofdecreasingpricesItmightbemorecosteffectivetohavelong-termrelationshipswith2to3truckingcompaniesthantohaveowntrucksTraditionally,largemanufacturershaveownwarehouses,thereforetheydon’tneedtooutsource.Butthequalityofthosewarehousesisusuallyoutdatedandvalue-addservicesarelimitedWarehouses/CYsatportsareownedandmanagedbyportbureausForlogisticsservicesproviders,lackofmodernwarehouses/distribution-centersisoneofthebottlenecksIncoastalareas,MaerskandP&OhaveprovidedwarehousingrelatednewvalueaddedservicesforMNCs,esp.footwearcompaniesInterestLevelServiceProvidersServiceTypeRemarksSource:A.T.Kearneyfieldinterviewsandanalysis …aswellasCustomsBrokerageandForwardingD-to-D542PortbureausFreightagentsProfessionalbrokeragehousesCOSCO,PenavicoSinotransMaerskMaerskP&OCOSCOCustomsclearanceanddutypaymentBOLandotherdocumentmanagementSpacebookingwithlinehaulcarrierCargotrackingTradeconsultingDoor-to-doorservicesInterestLevelServiceProvidersServiceTypeCustomsBrokerageForwardingSource:A.T.KearneyfieldinterviewsandanalysisShippersusuallyoutsourcecustomsclearanceto3rdparty,orliketohavetheserviceproviders’consulting/supportonthatOntopofthetraditionaldocumentservices,increasingdemandcomesformoreclient-centeredservice,suchasthedeliveryserviceofBoL,andwithbetterqualityEmergingrequirementformorevalueaddedservicessuchastradeconsultingoncontractterm,L/C(esp.forsmalltomiddlesizedlocalcompanies)anddestinationmarketinformationfeedback(esp.fordemandsensitiveproductssuchasapparel,furniture,etc.)CargotrackingisoneofthegapsbetweenChinesecompaniesandthosegloballeadingcompanieswithGPSDemandfordoor-to-doorservicesandex-works(EXW)termsisincreasing,inordertoreducedamagerateduringtransportation,guaranteequalityofcargo/deliveryservices,andimproveshippers’perceptionamongcustomersTheserequirementsareusuallyfromcontractssignedoverseas,thereforesaleseffortsshouldcooperatewithgroupHQandoverseascompaniesRemarks ThequalityoflogisticsservicesofferedinChinaarenotgood–asindicatedbypoorperformanceonon-timedelivery,cargolossanddocumentaccuracyOnTimeDeliveryRatio(>90%)CargoLossRatio(<2%)DocumentAccuracyRatio(<2%)Note:(1)SurveybytheChinaWarehouseAssociation(2000and2001)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource:Chinainfobank,ChinaWarehouseAssociate However,satisfactionlevelsforlogisticsservicesinChinaarerelativelyhigh,possiblyindicatinglowexpectationsNote:(1)SurveybytheChinaWarehouseAssociation(2000)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource:Chinainfobank,ChinaWarehouseAssociateSatisfactionofLogisticsServicesIndicatedbyManufacturers(2000)SatisfactionofLogisticsServicesIndicatedbyDistributors(2000) 3.CompetitiveEnvironment IncreasingdemandforglobalreachandcapabilitiesfuelsconsolidationaslargelogisticsserviceprovidersarepositioningthemselvesforsuccessCompetitiveEnvironment-GlobalThelogisticsservicesindustryiscomposedofanumberofdifferenttypesofplayersFourfactorsareshapingthecompetitiveenvironmentinlogisticsservicesanddrivestheacceleratingpaceofconsolidationintheindustry-Economicsofscale,demand-pulllogistics,newcapabilities&globalreach,and“one-stop-shops”Theimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehighvalueendofthebusinessthatisemerginginlarge,complexandlong-termcontractsThus,M&AactivityhassurgeddramaticallyinthelastcoupleofyearsGoingforward,AsiaislikelytoexperienceincreasedM&Aactivity-especiallyasChinaenterstheWTOContainershippingcompaniesareaggressivelydevelopinglogisticscapabilitiesandAPL,Maersk,Hapag-LloydandNYKlinehavebuiltseparatebusinessunitstofocusonthemarketforvalue-addedlogisticsservices:Casestudy-MaerskLogisticsstrategyCasestudy-APLLogisticsstrategyGlobalplayersarepositioningthemselvesforsuccess:Casestudy-UPSLogisticsCasestudy-FedExLogisticsCasestudy-C.H.RobinsonAnewtypeofinternet-basedlogisticsserviceproviderhasrecentlyemergedInternet-basedlogisticsservicescompaniesareofferingamultitudeofvalue-addedservices,e.g.automatedtrackingandtracing Increasingdemandforglobalreachandcapabilitiesfuelsconsolidationaslargelogisticsserviceprovidersarepositioningthemselvesforsuccess(cont’d) CompetitiveEnvironment-Global ThelogisticsservicesindustryiscomposedofanumberofdifferenttypesofplayersSupplyChainMgmt.SalesFunction-FreightAgglomerationAssetOperationAssetProvisioningFreightForwardersShippingLinesTerminaloperatorsPort,ShipContainerlessorLogisticsServiceProvidersLogisticsServicesProvisioningTypesofService/ProviderSource:A.T.KearneyAbilitytoDifferentiateAssetBaseCoreExtensionRegularActivitiesIntegrators FourfactorsareshapingthecompetitiveenvironmentinlogisticsservicesanddrivingtheacceleratingpaceofconsolidationintheindustryScaleScaleisthekeytocapturehigh-valuemarketsegmentsSource:LehmanBrothers,A.T.KearneyAnalysisCompetitiveEnvironmentNewCapabilities&GlobalReachIndustry-specificskillsandgeographiccoverageareincreasinglyimportantcapabilities“Demand-pull”logisticsThemoveawayfromsupply-pushtodemand-pulllogisticsincreasestheneedforintegratedlogisticscompanies“One-Stop-Shops”Customers’drivetofocusonalimitednumberofcorelogisticsservicesuppliers1234 Drivers-Scaleand“Demand-Pull”logistics“Demand-Pull”LogisticsThemovefromsupply-pushtodemand-pulllogisticsstrategiesincreasestheneedforintegratedlogisticscompaniesthatprovidecompletesupplychaincoverageandadvancedinformationsystemstolinkallcomponentsofthechainSource:LehmanBrothers,A.T.KearneyAnalysisScaleTheimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehigh-valuemarketsegmentthatisincreasinglylarge,complexandlong-temcontractbasedThesurgingM&Aactivityhasbeenanevidenceofleadingplayersareseekingscale12 Drivers-NewCapabilitiesand“One-Stop-Shops”“One-Stop-Shops”Shipperseekingtoobtainasupplychainadvantagethroughthecloseintegrationofalllogisticsoperationsareincreasinglyawardingexclusivecontractstointegrated,multi-functionallogisticsserviceprovidersformajorsegmentsoftheirsupplychain(e.g.inboundautopartstoanassemblyplant)-theobjectiveistoreducecoststhroughoutthesupplychain,moveinventoryfasterandcontrolitbetter,andtoobtaintransparencyacrossallelementsonthesupplychainSuchshippersaredeveloping“coresupplier”strategieswithalimitednumberofhand-pickedtransportationandlogisticsserviceproviderswhohavewontheconfidenceoftheshipperstobetruestrategicpartners,workingwiththeshippersonprogramstoachievefurthergainsinlogisticsefficiencyShippersarealsocoordinatingtheirsupplychainstrategieswithotherkeysuppliersofmaterialsandservices(andevenwithcompetitors)wheresignificantefficiencygainsmaybemadeSource:MerrillLynch,A.T.KearneyAnalysisNewCapabilities&GlobalReachIndustry-specificorgeographiccoverageallowlogisticscompaniestodevelopsuperiorbusinessefficienciesandsystemscapabilitiesShipperslookingforasupplychainadvantageareincreasinglyfocusingontighteningtheinterfacebetweendifferentlogisticsstepstopreventthelossofsupply-chainefficienciesincaseswheredifferentoperatorsinteractpoorlyduetolackofcommunicationanddifferentcommercialprioritiesThistrendisparticularlymarkedwhereshippersaimtoreduceinventorylevelsbymovingawayfromtraditionalsupply-chainmodelstowardsademand-pullmodelLogisticsserviceprovidersaredevelopingthecapabilitiestomeettheseneedsthroughbothinternalinitiativesandM&ASeveralmajorinternationallogisticsserviceprovidershaveacquiredoperationsinothercountriesinordertobuildaninternationalcapabilitytomeetcustomerrequirementsforglobalservicecoverage34 Theimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehighvalueendofthebusinessthatisemerginginlarge,complexandlong-termcontractsSource:CompanywebsitesExamplesofLogisticsOutsourcingContracts2000–2001DateProvidingstorage,warehousemanagement,pickandpackandUKandEiredistributionservicesforBoehringerIngleheim’sproductportfolioUS$20MnExelDirectBoehringerIngleheimManagingtheinboundtransportationformorethan1,500suppliersinto26GMPowertrainengine,transmissionandcomponentplants,primarilyinN.AmericaN/AFedExGeneralMotorsExelwilloperateSainsbury’snewRegionalDistributionCentreatEmerson"sGreen,BristolProvidinginternationaltransportationandlogisticsservicesManagingthemajorityofthemilitary"soutboundfreightshipmentsfrominstallationsinAlabama,FloridaandGeorgiaWarehousingserviceinMechanicsburg,PennsylvaniaAsupply-chainmanagementprogrambetweentheUnitedStatesandtheUnitedKingdomDeliveringonlinefulfillmentandphysicaldistributionservicesServicesN/AExelDirectSainsbury"sN/AEGLEagleGlobalLogisticsNokiaUS$33MnEGLEagleGlobalLogisticsMilitaryTrafficManagementCommandN/ADSCLogisticsNabiscoFoodGroupN/ADanzasAEIBodyShopInc.N/ADanzasAEIStudioDirectSize(US$Mn)LogisticsServiceProviderCompanyTransportingessentialconsignmentsbetweensixproductionplantsandresellers,dealers,wholesalersandconsumersthroughoutEuropeResponsiblefortime-specificdeliveriestoover4,000dealershipsfromfivecentrallocationsN/ATNTLogisticsMotorolaN/ATNTLogisticsGeneralMotorsPharmaceuticalAutoGroceryretailTelecomGovernmentFoodHealthcareE-commerceIndustryTelecomAutoJun.2001Since1995May.2001Jun.2000Apr.2001Jan.2001Oct.2000Mar.2001Oct.2000Oct.2000 Source:CompanywebsitesWarehousingmanagement,distribution,inventorydeploymentofsuppliesandpartsandtransportationforthedeliveryoffinishedproductstomarketN/ARyderSystemInc.OfficeEquipmentXeroxCorporationApr.2000Manageandoperatetruckload,rail,dedicatedfleetandsubstituteserviceoperationsfor31Wal-MartCenterpointdistributioncentersnationwideUS$100MnannuallyJ.B.HuntRetailWal-MartStoresApr.2000ImplementatransportationmanagementprogramforitsElectronicSensorsandSystemsSector(ES3)andIntegratedSystemsSector(ISS)N/ARyderSystemInc.ElectronicsNorthropGrummanCorporationFeb.2001Manageinbound,outboundandthird-partyshipmentsdomesticallyandinternationallythroughoutNorthAmericaandEuropeN/ARyderSystemInc.AutoArvinMeritorMay.2001ManageSlimoFast"ssoledistributioncenterintheU.S.ManageallaspectsofHomeLife"ssupplychain-includingsupplychaindesign,informationsystemsdesignandintegration,transportation,warehousing,homedeliveryandreverselogisticsManageandoperateprivatefleetoperationsatelevenseparateNorthAmericanlocationsServicesN/AMenloLogisticsFoodSlimoFastFoodsFeb.2001N/AMenloLogisticsHomefurnishingHomelifeAug.2000N/AJ.B.HuntPlasticsM.A.HannaCompanyFeb.2000LogisticsServiceProviderIndustryCompanyDateSize(US$Mn)ManagingglobalsupplychainUS$150MnUPSLogisticsSemiconductorNationalSemiconductorAug.2000StreamlineSEMCO’sinternationaltransportationandglobalsupplychainN/AUPSLogisticsElectronicsSamsungElectro-MechanicsCo.Nov.2000Theimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehighvalueendofthebusinessthatisemerginginlarge,complexandlong-termcontracts(cont’d)ExamplesofLogisticsOutsourcingContracts2000–2001 Thus,M&AactivitiessurgedinthelastcoupleofyearsGoingforward,AsiaislikelytoexperienceincreasedM&Aactivity,especiallyasChinaenterstheWTOSource:MerrillLynch,A.T.Kearneyanalysis227ProvidingtruckbrokerandintermodalmarketingservicesMarkVIIOceanGroupplcJul27,991,140LeadingU.S.freightforwarderAirExpressInc.DeutschePost/DanzasNov04,99136InformationtechnologyBased3rdPartyLogisticsProviderAmericanBackhaulers,IncC.H.RobinsonWorldwide,IncNov18,99N.A.AirfreightforwarderinChileCargoLimitadaEagleUSAAirfreight,IncDec16,996503PLwithspecialtyinAutomotiveCustomizedTransport,IncTNTPostGroupJul03,00934TruckingservicesproviderAmericanFreightwaysCorpFedExCorpNov13,00600Oneoftheworld’slargestfreightforwardingcompaniesSembcorpLogisticsKuehne&NagelNov28,00382TruckloadmotorcarrierinNorthAmericaSwiftTransportationM.S.CarriersDec12,00450Leadingfreightforwarding,custombrokerageandlogisticscompanyFritzUPSJan10,01EquityPurchasingPrice(US$Mn)Target/AcquirerDateAnnouncedBusinessofTarget Containershippingcompaniesareaggressivelydevelopinglogisticscapabilitiesand...321134353555Consolidation111111211535Sourcing121111214545Forecastinginventory121124411455Supply-ChainConsulting323333433454Intermodal333334454555DocumentHandling1113K-Line2234COSCO1113CPShips1112Evergreen3332YangMing5333OOCL3454MOL5553Hapag-Lloyd4224P&ONedlloyd(1)5554NYK5555NOL/APL5554MaerskTrackingDistributionWarehousingGlobalPresenceNote:(1)DoesnotincludelogisticsservicesofP&OGroupthatarenotwellcoordinatedorintegratedwithP&ONedlloydSource:A.T.KearneyShippingCompanyLogisticsCapabilities …APL,Maersk,Hapag-LloydandNYKLinehavebuiltseparatebusinessunitstofocusonthemarketforvalue-addedlogisticsservicesWorldwideRevenuesfromCarriers’LogisticsBusinessUnits(US$,Mn)1999200019992000199920001999200018%-10%157%29%(1)APLHapag-LloydMaersk-SealandNYKNote:(1)MaerskLogisticsisnewintegratedcompanyofSeaLandLogisticsandMercantile,therevenuein1999isonlyMercantile.Source:Hapag-LloydAnnualReports;NYKwebsite;CSFBreportonNOL/APL;A.T.KearneyAnalysis CaseStudy-MaerskLogisticsStrategyisprovidingcomprehensive“all-time,all-space,andall-mode”solutionstoattractcustomersVisionStrategicInitiativesCoreCompetenciesBusinessMaerskLogistics“Bythoroughlyplanningandexecutingsuitablecostreducinglogisticssolutions,wesecureourclientsanimportantcompetitiveedge.”Logisticsbusinesstotallyindependentfromshippinglines,mainbusinessesnotfromshippinglinesAggressivelybuildingairfreightunittobecomeall-modeone-stopproviderforitscustomersIntroducedadvancedITsystemssuchasINTRA,M*Power,toenablesophisticatedcustomertrackingofordersandgoodsStrongreputationinshippingleveragedtologisticsbusiness,ensuringcustomersreliabilityinservicequalityandtimingMajorservicesdividedintosupplychainmanagement,airfreight,warehousing,consolidation,documentation,bar-codingandEDIMaerskLogisticshavingUS$10Mninrevenuein2000,12%ofthatofMaerskGroupMainclientsincludingTarget,Walmart,Footstar,allwithlong-termcontractsGlobalpresenceandlocalknowledgewithabout200salesofficesinover70countriesaroundtheworld,enablingMaerskto“pinpointthewhereaboutsandstatusofimportantcargoenroute”withlocalrepresentativesAdvancedsystemofwarehouses/distributioncenters,195worldwideand72inAsiaSource:A.T.Kearney CaseStudy-APLLogisticsStrategyisfocusingonITcapabilityandselectedindustrieswithaggressivedevelopmentoflogisticsoperatingterminalsworldwideSource:A.T.KearneyVisionStrategicInitiativesCoreCompetenciesBusinessAPLLogisticsAPLLogisticsisdedicatedtoprovidingcomplexinformationsolutionsbyenhancingsupply-chainvisibilityandintroducingnewproductsandservicesthathelpcustomersruntheirbusinessesmoreefficiently.Focusingoncustomerintimacy,aggressiveapplicationofInternettechnology,absolutecommitmenttoinvestmentandserviceexpansionsFocusingonretail,automotiveandindustrialclientsaroundtheworldRemainedindependentwithlessthan50%ofoutsourcedseatransportationneedscarriedviaAPLvesselsAcquiredGATXLogisticstoplugthebiggapinthewarehousemanagementanddistributioncapabilitiesinNorthAmericaManagedtoleverageoncustomerrelationshipbuiltthroughfreightforwardingExperiencedmanagementwithquick,innovativeandaggressivemarketingstrategyandkeenvisionintofuturecustomerneedsServicesdividedinto4groups:consolidation,intermodalmanagement,contractlogisticsconsultingandautomotivelogisticsFY2000revenueUS$479Mn,roughly10%oftotalAPLrevenueMainclientsincludingSears,ColgatePalmolive,Kellogg,Rolls&Royce,HoneywellGlobalpresencewithofficesin55countriesaroundtheworldStrongwarehousinganddistributioncapacitywith115warehousesinNorthAmerica,LatinAmerica,Europe,SoutheastAsiaandChina CaseStudy-UPSLogisticsStrategyisleveragingawellrecognizedparcelservicesandstrongfinancialpositiontodevelopcomprehensiveglobalsupplychainsolutionsUPSLogisticsGroupseekstobeaproviderof“comprehensiveglobalsupplychainsolutions”Offeringafullportfoliooflogisticsservicesonaglobalorregionallevel,includinglogisticsdesignandreengineering,managementexpertise,andleadingedgeinformationsystemsRecentlyacquiredFritz.,aglobalfreightforwarding,customsbrokerageandlogisticscompany,LivingstonandFirstInternationalBancorp,aleadingprovideroftradefinancingDevelopedabilitythroughUPSCapitaltoenablebusinessestolinktheircashflowsmanagementStrongglobalnetwork,reachingalmostallmajorcities,esp.withinUSBrandimageofbeingfastandreliableestablishedfromparcelservicesUPSFY2000totalrevenuereachedUS$29.7Bn,logisticsrevenueaccountedforlessthan5%ofitstotalrevenueContinuouslyhelpingGMNorthAmericatomanageitsinboundtransportationfrommorethan1,500suppliersinto26GMplants(HonoredasSupplieroftheYear)StrongfinancialpositionwithlargerevenueandrecentstockofferingsVisionStrategicInitiativesCoreCompetenciesBusinessUPSLogisticsSource:A.T.Kearney CaseStudy-FedExLogisticsStrategyisbuildinganintegratedtransportation,informationandlogisticssolutiononstrongglobalnetwork,controlofairfreightandkeycustomerrelationshipsSource:A.T.KearneyVisionStrategicInitiativesCoreCompetenciesBusinessFedExLogisticsFedExseekstoprovide“integratedtransportation,information,andlogisticssolutionsthroughapowerfulfamilyofcompaniesthatoperateindependentlyyetcompetecollectively”CombiningAmericanFreightwayswithVikingFreighttocreateFedExFreight,expandingitsscopeofLTLservicesinNorthAmericaCreatingFedExCorporateServicestoprovidecustomerswithasinglepointofaccesstothefullrangeofservicesCreatingFedExTradeNetworkstooffercustomsbrokerageandtradefacilitationsolutionsforglobalcustomersAcquiredTowerGroupInternational,aleadingcustomsbrokerandWorldTariff,apremiersourceofcustomsdutyandtaxinformationKeycustomerrelationshipandcontrolofairlineresourcesStrongglobalnetwork,reachingalmostallmajorcities,esp.withinUSBrandimageestablishedfromparcelservicesofbeingfastandreliableFortheyearendingMay31,2000,FedEXFreightrevenuereachedUS$835Mn,whichisabout4%ofFedEX‘stotalrevenue.However,FedEXFreightrevenueisprojectedtogrow150%in2002ContractedwithFordinNorthAmericatoreduceitsdeliverytimefromplantstodealersandcustomersAgreementwithCompaqNorthAmericatomanageitsservicepartsnetworkThree-yearagreementwithSprinttooperateandmanageitsNationalReturnsProcessingCenter(USA) CaseStudy-C.H.RobinsonLogisticsStrategyisseekingwaystorepositionitselfandits14,000motor-carrierfleetSource:A.T.KearneyVisionStrategicInitiativesCoreCompetenciesBusinessC.H.RobinsonRepositionasfullservicelogisticsproviderConvertingfromtraditionalcarrierstomodernfullservicelogisticsproviderServicesincludesourcing,logisticsandinformationsystemsAddingmorecapabilitiestomeetneedsincludingintruck,air,ocean,intermodal,customsclearanceContracttruckingwith14,000motorcarriersoncontractExtensivecustomerbasewithover8,600customersestablishedincommoditytradingKnowledgeincommoditytradingFullyintegratedintofoodsupplychainExtended“highend”experienceacrossindustriesandservicesUS$1.79Bninrevenueswith1,900employeesRapidtoplinegrowthofover15%Officesin38statesand10foreigncountries Anewtypeofinternet-basedlogisticsserviceproviderhasrecentlyemergedTransplace.comTMSource:A.T.KearneyInternet-BasedMarketPlacesProvidingshipperswithlogisticsworkflowmanagementtoolssuchasordertracking,payment,billing,etc.CompanyStrategicFocusRoleExampleWeb-BasedLogisticsManagementSolutionsSupply-ChainIntegrationSolutionsProvidingthearchitectureandintegrationengineswhichenableinter-enterpriseintegrationandempowermarketplacesProvidinginternet-basedtransportationexchange/auctionservicesResultClearfailureasastrategy-carrierstypicallyrefusedtocooperateintheirowndisintermediation.VirtuallyallexchangeshaveeithercloseddownormovedtoanotherstrategyOutcomeremainsunclear-questionremainsofwhethercompaniescanachieveenoughcriticalmassincustomersupporttobeviableOutcomeremainsunclear-criticalmassalsoanissueinthefaceofchallengesfromSAP,Oracle,etc. Internet-basedlogisticsservicescompaniesareofferingamultitudeofvalue-addedservices,e.g.automatedtrackingandtracingSource:Surveytomorethan70e-logisticscompaniesmadebyCSFBExisting/PlannedLogisticsServicesbyE-LogisticsCompaniesActasathird-partytrackingandtracingagentbasedonthedataaggregatedfromvarioustransportationprovidersAforumforwhichthepurchaseofindustry-relatedgoodscouldbenegotiatedClassifythelegalitiesandcostbehindthemovementofproductsbetweencountriesaroundtheworldAforumforwhichthetransportationcomponentoflogisticscanbenegotiatedamongvariouspartiesAB2Cserviceofferedtomanufacturersandretailersinwhiche-logisticscompanyprovidestargetedmarketingservicesOptimizeafleetofassetsgiventheiracceleratedvisibilityintothedemandsideofthesupplychainProvidebasetariffratesforgivenmovementsanddifferentservicecriteriaAstheauction/exchangefeaturegainsmarketpenetrationwithshippersandcarriers,ane-logisticscompanywillbeabletodesignatefreightmovementstocarriersAstrackingandtracingtechnologydevelops,e-logisticscompanieswillhavethecapabilitytoproactivelywarntheircustomersofcertainpotentialservicefailuresHandletheflowoffundsbetweeneachpartyThestorageofsupplychaindatarelatedtoindividualcarrierperformanceandbroaderindustry-widemetricsUtilizetheflowofinformationthatpassesthroughtheirsystemstoautomatethedocumentationprocessPhysicalwarehousinganddistributionofproductspurchasedfromanonlineretailerBriefdescriptionDemandLevelAutomatedtrackingandtracingPurchasingportalInternationallandedcostsFreightexchange/auctione-MarketingLaneoptimizationIndividuallanepricequotesAutomatedbookingServiceFailureNotificationAutomatedbillingDataminingDocumentatione-FulfillmentService CompetitiveEnvironment-China InChina,thetransportationandforwardingsectorsaredominatedbydomestic,mainlystate-owned,companiesRoad&SeaFreightTransportationTherearesignificantpresencesofSOEs–Sinotrans&COSCOAir-freightMarketiscontrolledbyfirmssetupbyCivilAviationAdministrationofChina,butCOSCOenteredthemarketin1995InlandForwardingHandledbydomesticfreightforwarderswhoareusuallysub-contractedbytheinternationalfreightforwardersRailwaysRailfreighttransportationisgovernedbytheMinistryofRailway(MoR).COSCOworkswithMoRoccasionallyonco-operationbasisTruckingMosttruckingcompaniesinvolvedininlandtransportationaredomestic.FreighttransportbetweenHKandChinaareeitherChinesestate-ownedorSino-HKJVsCustomsBrokeragesAspartofamovetorestructuretheindustry,theCustomsGeneralAdministrationstoppedapprovingcustomsbrokerageslicensein1998DomesticCompanyDominationSource:A.T.KearneyAnalysisStoppedapprovingcustomsbrokeragelicense,notonlytoforeignfirms Sixtypesofserviceprovidersarecompeting–transportationcompanies,nationalpostaloperator,manufacturingenterprises,domesticlogisticscompanies,andforeignlogisticscompaniesandemerginge-commerceprovidersTypeTraditionalTransportationCompaniesNationalPostalOperatorManufacturingEnterprisesForeignLogisticsCompaniesDomesticLogisticsCompaniesStrategicAdvantagesOwninglogisticsresources,suchaswarehousesandvehiclesEstablishedcountrywidedistributionnetworkReadyaccesstobusiness-internalGlobalnetworkcoverageandscaleeconomyRecognizedbrandname,broaderserviceofferingandbetterservicequalityStrongresourceintegrationcapabilitiesFinancialsupportforlongterminvestmentLessbusinessknow-howoflocalmarketLackofinlandnetworkandresourceaccessibilitiesLessrelationshipswithlocalcustomersCertainrestrictionsfromregulationsCustomerbasefromlong-termtransportcustomersBetterresourceaccessibilityduetostrongrelationshipwithportbureau,customs,andgovernmentbureausBroadnetworkalloverChina,withunitrains,warehousesandvehiclesPrivilegedpositionasgovernmentplayerAlreadyestablishcooperationwithhighprofileclientslikeDell,IBM,HP,Haire,etc.StrongabilityinintegratingresourcesGoodinternalmanagementandwillingnesstoinvestinhumanresourceandITsystemExamplesCOSCOSinotransChinaPostHaier;TCLMaerskLogistics;APLLogisticsPGLSource:A.T.KearneyAnalysisStrategicDisadvantagesInsufficientunderstandingandlimitedserviceofferingLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformLackofoverseasnetworkLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformRelativelypoorinternalmanagementCanhardlyachieveeconomiesofscaleMoveawayfromcorebusiness/competenceLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformLackofstronggovernment/regulationsupportLackofownlogisticsresources/facilitiesCanhardlyachieveeconomyofscaleE-commerceProvidersOnlineserviceprovisionbackedbyrichofflineresourcesofthememberallianceThebestapproachtoreducetheinformationasymmetryandtospeeduptheinformationexchangeYettoidentifythebestpositioninginChinalogisticlandscapeYettoenhancethemanagementandITcapabilitytotrulyaddvaluethroughenablingintegratede-logisticsservices56NET.com Currently,foreigncompanieshavelimitedpresenceoutsideChina’sFreeTradeZones.ThisislargelyduetocurrentrestrictionsonforeignparticipationThereare444Sino-foreignJVsintheformofheadquarters,branchesandsubsidiaries.However,manyofthemareintheFreeTradeZonesPacificEastAsiaCargoAirlineshasenteredatie-upwitharegionalairlineDHL-SinotransInternationalAirCourierLtdoperatesinbigcitiesEvergreen,Maersk,OOCLAfewcustomsbrokeragehouseshavesetupelectronicsystemswithCustomsGeneralAdministrationandbanksintheFreeTradeZonesForeignJVhassetupwarehousingcapacitiesinvariousFTZAPLisengagedinAmericanConsolidationservicesInchcape,throughaJVwithCOSCO,operatesafleetofcontainertrucksservingkeyportsandindustrialcitiesFritzinvestedinalogisticscentersatYantianFTZ,integratingtheconsolidation,warehousingandtruckingfunctionsFederalExpressiscurrentlytheonlydedicatedUScargocarrierflyingtoChinaOOCLisengagedincargosystemsExampleofforeignparticipation4CourierServices5Airline3ShippingLine5CustomsBrokerage2(EncouragedinFTZ)Warehousing4Consolidation4DomesticTrucking2(EncouragedinFTZ)LogisticsCenter4AirfreightForwarder4InternationalFreightForwarderRestrictionsonForeignParticipationSector=low=highSource:A.T.KearneyAnalysis ThelogisticsbusinessofmajorglobalserviceprovidersisexpandingaggressivelyinChinaandwillrepresentasignificantthreattodomesticplayersHasbeeninChinasince1995,offersawiderangeoflogisticsservicesthroughcentersin13locations,OpeneditsfirstnationaldistributioncenterinShanghai,asanimportantfirststepinMaersk"s"fullycontrolledpan-Chinadistributionnetwork"APLLogisticsisexpandingonitsstrongAsianbase(e.g.,10logisticscentersinChina)throughmajoracquisitionsoflogisticscompaniesinAmericaandEuropeAPLLogisticswillfocusonChinaandIndia,wherethecompanyismovingtoretailbusinessandlocaldistributionOOCLoperates4majorlogisticscentersinChinaandisseekingtoleverageCargoSmarttechnologyStartedChinabusinessin1988,firstJVwithSinotransin1996PlanningtodoubleitsofficesinChinato40inyear2001andisnowoperating6flightstoChinathisyearPlantoexpanditsserviceareainChinafromabout200citiescurrentlyto300citiesinthenext5years,plantoopenJVsinShanghaiandShenzhenthisyearChinabusinessgrewover30%inyear2000MaerskAPLOOCLUPSFedexSource:JoCOnline,A.T.KearneyAnalysisCompanyChinaOperations CaseStudy-SinotransisaspiringtobecomeanationallogisticsleaderbyleveragingitsestablishedcustomerbaseandnationalreachCurrentStatusFoundedin1950Nationalcoveragewith13businessunits,497rep.offices/branchesand238JVsInternationalaccesswith12overseasrep.officesand29JVs/branches.Longtermrelationshipswithmorethan400freightforwarders,shippingagentsandcarriersinmorethan150countries64,000employees,3.32MSq.Mwarehouses,2.38MSq.Mfreightyard,3000trucks,15proprietaryterminals,77unittrainsand2MDWTshippingcapacityNationalITsystemwithglobalcargotrackingcapabilityEstablishedJVwithleadingexpressparcelserviceproviderssuchasDHL,UPS,TNTandOCSinmorethan20citiesinChinaMajorInitiativesEstablishedlogisticsdevelopmentdivisioninmid-2000withinitialfocusondevelopinglargeaccounts:Multinationals:InventorymanagementanddistributioninChina.RecentaccountsincludePhilipsEngineeringprojects:Internationalmultimodaltransfer.RecentaccountsincludetwoleadinghydropowerplantsStrengtheningITsupportingfunctionCurrentlypartneringwithleadingITvendors,suchasCARealigningsales,marketing,operationandfinancialprocessesinregionalbranchesTobecomeanationalleaderinprovidingfull-rangeintegratedlogisticssolutionsbyleveragingitsextensivenationalnetworksandcustomerbaseObjectiveSinotrans-CompetitiveStrategy CaseStudy-ChinaPostisseekingtoenterthelogisticsmarketbyleveragingitsbrandandextensivenetworkCurrentStatusAnunprofitablenationalpostmonopolystrugglingwithdecliningtraditionalbusinessandincreasedcompetitioninhighgrowthbusiness236regionaldispatchbureauswhichcanbecomeregionaldistributioncenters,57,000branches(15,000ofthemarenetworked),41,000vehicles,593trainwagons,3proprietaryaircraftAnationalfinancialtransactionnetwork(“GreenCardNet”)connecting975citiesin30provincesAnationalcallcenterservicecalled”185”andanemerginge-commerceplatformcalled”183”MajorInitiativesPositioninglogisticsasamajorbusinesslineforgrowthbyleveragingcurrentnationalcoverageandbrandImprovingitsnationalITbackboneof“GreenCardNet”Branchesinmoredevelopedareaspositionedaslogisticsintegrators:GuangdongPostispartneringwithLegendone-logisticsGuangdongPosthasacquiredlargeaccountssuchasHaier,PanasonicandP&GRecentlyaddedthreenewdomesticairservicerouteswhilefacinganincreasingpresenceofUPSandFedExEstablishedstrategicalliancewithChinaSouthernAirlinesfordoor-to-doorservicesNegotiatingwithbanksonpossibleoverseaslistingwithlogisticsasonemajorbusinesslineTomakelogisticsoneofChinaPost’skeygrowthareasandatoolforturnaroundObjectiveChinaPost-CompetitiveStrategySource:Companywebsite,ChinaInfoBank,QinghaiSecuritiesNews,CAACJournal CaseStudy-MaerskLogisticsisinvestingheavilyinChinaandhasestablishedarelativelylargepresenceCurrentStatusOfficesin14citiesincoastalareas,centralChina(Wuhan&Chengdu)andnorth-eastChina(Shenyang)Warehouseaccessin11citiesinChinaWorkingwithagenciestocoverareasacrossChinaFirstEuropeanlogisticscompanygrantedincorporation(aswhollyownedforeignenterprise)inChinaandobtainedoperatinglicensein1998MajorInitiativesInvestingheavilyinPRandgovernmentrelationshipsbyadvocatingChinatraderelations,sponsoringBeijingOlympicbidandcharitiesetc.Launchingwiderangeofservices,includingIn&outboundsupplychainmanagementExportandimportserviceDistributionWarehousingContractlogisticsForwardingandgroupageAirfreightOfferingspecialservicesincludingQ.I.CBar-coding&labelingGOHcarton&paperpalletShrink-wrapping&slip-sheetingContinuetoexpandlogisticsservicesofferingthroughoutcoastalandinteriorofChinaMeetandsurpasstheclients’mostcomplexandchallengingrequirementsObjectiveMaerskLogistics-CompetitiveStrategySource:Variouscompanywebsite,COSCO,A.T.Kearneyfieldsurvey CaseStudy-PGLogistics,apuredomesticlogisticintegrator,hasinvestedheavilyinITcapabilitiesandprovidesarangeofSCMservicesCurrentStatusFoundedin1994toserveP&GinChinaAprofessionallogisticsintegratorwithheadquarterinGuangzhouand45branches/officesnationwideRevenuein2001isexpectedtobeUS$30Mnwithabove500employeesAwebbasedlogisticsITplatformconnectingallofficesnationwideMorethan50accountscurrently,mostofwhicharemultinationals,e.g.Philips,ElectroluxandBayerMajorInitiativesProvidingarangeofservicesaimingatsupplychainintegrationLogisticsplanningLogisticsmanagement-transportation,warehousing,consolidation/de-consolidationandpackagingetc.Informationmanagement-ITplanning,supportandmanagementHeavilyinvestinginITcapabilitiesIntegratingownprocesswithcustomers’processesRecentlyinvestingindistributioncenterinSuzhou(50KSq.Mwarehouse)BecomealeadinglogisticsintegratorwithlightassetbaseObjectivePG-Logistics-CompetitiveStrategySource:Companywebsites,ChinaInfoBank CaseStudy-Haier,aleadingdomesticconsumergoodsmanufacturer,isleveragingitsextensivenetworkandcapabilitiestogrowinlogisticsCurrentStatusTheNo.1domesticelectricalapplianceproducerinChina,foundedin1984Morethan38,000distributionbranchesin160countriesCurrentlyhas42distributioncentersserving1550specialtystoresand9000salesoutletsinChinaMajorInitiativesStartedlogisticsprocessreengineeringin1999,aimingatPurchasefororderGlobalsupplychainstreamliningJITAnewsystemenablingincreasedservicelevels:100%onlinebiddingandpurchasingReducedpurchasingleadtimesfrom10daysto3daysSuppliersreducedfrom2,336to9788-hourdeliveryinmajorcities,24-hourregionaldeliveryand4-daynationaldeliveryRecentlyinauguratedastate-of-the-artdistributioncenterZeroinventoryZeroworkingcapitalShortestorder-deliverycycletimeMakinglogisticscapabilityacorecompetenceObjectiveHaier-CompetitiveStrategySource:Companywebsites,ChinaInfoBank CaseStudy-DomesticChineselogisticse-commercecompanies,suchas56net.com,areemergingaslogisticsinformationplatformsCurrentStatusFirstlogisticswebsiteinChina,foundedinMayof2000by25Chinalogisticscompaniesasacommonlogisticse-commerceplatformBack-upbyextensivephysicallogisticsnetworksofChinaLogisticsEnterpriseAllianceLeveragingtheproprietaryinformationsourcesnationwideMajorInitiativesProvidingreal-timeinformationexchangeofshipperdemand,shippingcapacityandwarehousingcapacityTargetingtoimproveparticipants’shippingandwarehousingcapacityutilizationby15%byreducinginformationasymmetryandspeedingupinformationexchangeExpandingparticipants’3PLcapabilitybyproviding:OnlineconsignmentOnlineprocessvisibilitythroughadvancedtechnology,suchasGPSCustomizedLANservicestothemembersTobecomethemostinfluentialandmostcomprehensivelogisticsinformationplatforminChinaObjectiveSource:Companywebsite,ChinaInfoBank 4.RegulatoryEnvironment China’sentryintoWTOisexpectedtohavetwomainimplications-(1)thelogisticsmarketwillgrowrapidly,and(2)competitiveintensitywilldramaticallyincreaseImplicationofWTOEntryDetails1.WTOwilltriggerrapidgrowthoflogisticsservices2.WTOwillincreasecompetitiveintensityWTOreducestradebarriers.ChinesecompanieswillaccessoverseasmarketmucheasilyandMNCscandeveloptheChinamarketPossibledevaluationofRMBwillencouragemoreexportsandmoreforeigndirectinvestments,bothofwhichwillsignificantlyincreasetradevolumeWTOwillreducebarriersforinternationallogisticsproviderstodirectlyentertheChinamarket.Maersk,P&O,OOCLhavestartedtoaggressivelybuildrelationshipswithlocalshippersAsshippingagenciesaredoingalargeportionoftheirbusinesswithinternationalshippingcompanies,directlocalrelationshipbetweentheinternationalplayersandshipperswillsignificantlyreducetheneedforindependentshippingagenciesinfixedcontainerliners.Inaddition,currentlythepriceforshippingagencyrelatedservicesisfixedbythegovernmentWTOwillhaverelativelylessimpactonthecargoforwardingbusinessofcurrentplayers.LocalplayersstillhaveadvantagesinrelationshipswithshippersandlocalknowledgeSource:A.T.KearneyAnalysis AsChinaentersWTO,thecompetitiveenvironmentwillchangethroughopeningofseveralmarketsegmentsTypeofPriceControl1.Providingofficiallydeifinedfreightforwardingservices2.Operateownterminals3.OperateownwarehousePortareaOutsideport4.OperateowntrucksPortareaOutsideport5.Operateowndoor-to-doorB/LPortcitiesInlandprvovincesMajorActivitiesbyForeignFreightForwarders1.Minorityshareallowed2.MinimuminvestmentofUS$1Mn3.Geographiclimitation4.FewJVsareallowedfordomesticfreightforwarding1.Cantakemajorityshareindevelopmentofproprietaryterminal2.Cantakeminoriyshareincommonports3.NoactualcaseexistinChina1.Portarea-Nolegalframeworkexists.Subjecttonegotiationwithport2.Outsideport-JVCY/CFSexist3.Freignownershipingeneralwarehouseisforbidden1.Portarea-Nolegalframeworkexists.Subjecttonegotiationwithport2.Outsideport-Nolegalframeworkexists.SubjecttoMOCapprovalcasebycase.JVexistsThisservicefallsintotheNVOCCcategory.NVOCCisnotanofficiallydefinedbusinessinChinayet.AregulationtorectifyitslegalstatusandrelevanttermshasbeendraftedbyMOCandisunderreview.DetailsisnotavailableyetMarketpriceMOCstipulatedprice,withflexibilityMarketpriceMarketprice1yearafterWTOentry-Majorityshare4YearsafterWTOentry-whollyowned,norestrictionondomesticfreightforwardingThispieceistreatedasMFNexceptionduringWTOnegotiation.ItwillbesubjecttobilateralnegotiationscasebycaseUponWTOentry-minorityownership1yearafterentry-majorityonership3yearsafterWTO-whollyownedUponWTOentry-minorityownership1yearafterentry-majorityonership3yearsafterWTO-whollyownedNowMarketOpeningStatusTypeofPriceControlMarketpriceFurtherlooseningupMarketpriceMarketpriceFuturePotentialMarketOpeningSource:InterviewwithMOC;A.T.Kearney,WTOresearch 5.InformationTechnology StrongITcapabilitiesisbecomingacorecapabilityoflogisticsservicesprovidersandiscriticaltobuildingalogisticsservicesbusinessAsthesupplychainbecomesincreasinglydigitised,ITbasedservicesarebecomingacorecompetencyforanymajorlogisticsservicesproviderLeadinglogisticsplayershavededicatedextensiveresourcestomakingweb-basedsupplychainsolutionsakeypriority:MaerskhasinvestedheavilyinITthroughitson-linesystem,M*Power,whichenablesintegratedandcustomizedlogisticssolutionsAPLisaleaderinshippingrelatedon-lineservicesandhasextensiveITcapabilitiestosupplychainmanagementsolutionsDanzashasinvestedinanumberofB2CandB2BsolutionstosupportafullrangeofsupplychainserviceofferingUPShasinvestedinNetCel360,formedanalliancewithNetworkSolutionsanddevelopedasetofon-linetoolstoimprovee-commercecapabilitiesFedExhascreatedaportal,investedinTradeCompass,andformedallianceswithSAPandKPMGtoboostFedExcapabilitytomanagedigitalsupplychains Asthesupplychainbecomesincreasinglydigitised,ITbasedservicesarebecomingacorecompetencyforanymajorlogisticsservicesproviderElectroniccommercesupportingsupplierrelationshipsviaEFTandEDIRealtimevisibilityintoproduction/materialcontrolsystemsforreplenishmentLong-termcontractswithbuilt-injointcostobjectivesForecastingaugmentedbyadvancedsharingofallnecessaryinformationDemandinformationpullsordersthroughoutRealtimevisibilityofproductionscheduleandJITsupplierdeliveryEarlywarningsystemsofproblemsElectronicordertracking,communicationsandinquiryElectronicvisibilityofstocklevelsbylocationTechnologytoolsforcustomerinterfaceCommonsupplychaindatabase“TotalProduct”conceptwithsingleviewofinventorySupplychainpartnersactinparallelbasedonsharedinformationConsumerdemandinformationdrivessupplychainCommonunderstandingofsupplychainfact-baseOn-lineordertrackingPricetoolsConsumerWholesalerSuppliersManufacturersRetailerFundsConduitProductConduitInformationConduitSource:A.T.KearneySelectedE-logisticsServices MaerskhasinvestedheavilyinITthroughitson-linesystem,M*Power,whichenablesintegratedandcustomizedlogisticssolutionsM*Power™WebprovidesfullinformationonthestatusofeachindividualorderM*Power™AirfreightenablestrackingofairfreightconsignmentsM*Power™SPOTprovidesallclientswithanon-lineviewtothestatusoftheircargoM*PowerTMAnalysisisthereportingtoolforin-depthanalysisofallinformationM*Power™ShipperenablestheshippertodoallmaintasksrelatedtoexportingofgoodsToEstablishauniquesuiteofITsystemscalledM*Power™–designedforon-lineaccesstologisticsdataandindividuallyadaptedtoeachclient’suniquerequirementsToallowincreasedvisibilityforbothshippersandconsigneesoftheirpurchaseordersandinventoryofgoodsinthesupplychainToofferintegratedE-enabledlogisticssolutionstoclientsSource:Companyreports;A.T.KearneyAnalysis“…expandingourclientsoptionstoobtaincompletesupplychainvisibility,fromthetimethepurchaseordersareissued,untilthegoodshavearrivedasplanned.Dependingonthelevelofsophisticationweoffertailor-madesolutions,combingoneormoreM*Power™productsthatsuittherequirementsofspecificclientsatanygiventime”ITInitiativesRationaleObjectiveMaerskCaseStudy APLisaleaderinshippingrelatedon-lineservicesandhasextensiveITcapabilitiestosupplychainmanagementsolutionsNetTracprovidescustomer-specificITtrackingdowntotheindividualpurchaseofferandSKUlevelE-bookingoffersinternet-basedelectronicbookingincludingmaintenanceofaccountDomesticTrackingcapturesinformationaboutthedomesticdistributionofmerchandiseincludingmanagementandcontrolofinventories,trackingandprovidinglogistics,scheduleandwarehousereportsScan&PakWeblinkallowsdownloadingofPOdataorsendingoffactoryASNdataviatheInternetTobetheindustryleaderinsupply-chainvisibility,andthefirsttosendandreceivePOandASNs(advancedshippingnotice)electronically,aswellastoputaPO/shipmenttrackingapplicationtotheInternetTodevelopaglobalInformationServicesorganizationintegratingthesystemscapabilitywithestablishedlogisticsexperienceSource:Companyreports;A.T.KearneyAnalysis“APLLogisticsisuniquelypositionedtoleverageitsconsiderableITcapabilitieswiththeextensiveinfrastructureoftheNOLGroup…Managementofallsupply-chainelementsallowsus,asacarrier-neutralserviceprovider,todeliverone-stopcargo-flowsolutions”ITInitiativesRationaleObjectiveAPLCaseStudy DanzashasinvestedinanumberofB2CandB2BsolutionstosupportafullrangeofsupplychainservicesInvestmentsinB2Capplications:eVITAprovidingonlinestart-upcompanieswiththecapabilitytomarketproductsviaasafeset-upenvironmenteCommerceServices(ECS)servingbackendactivitiesascreditcardcertificationThePostBank(underdevelopment)actingasthelargesteTailbankinEuropeInvestmentsinB2Bapplications:Joinedanonlinemarketplaceventure:I2I(industrytoindustry)handlingtransportationanddistributionissuesImplementinganintegratedinterfacetoenhancethemoduleSAPR3offeringdirectaccesstoitswarehousingapplicationsystemLaunchedneweCommerceprojecttolinkitsownB2Cservicesandapplicationswiththosecreatedbyitsacquirer,DeutschePostToofferafullrangeofE-bizsolutionstoservebothfrontandbackendsofthemarketplacewithlinkagewithsuchtraditionalapplicationsasWMSandtrackandtraceTooffertailoredsolutionstoclientsinB2Bsectorandexpandthecompany’scapabilitiesinservingthissectorToprovideaseamlessservicethatcoverstheentiresupplychainToensureallsynergiesbetweenDanzasandDeutschePostbeenexploitedandthereisnoduplicationofeffortsanddevelopmentswithinthelatter’svarioustransportanddistributiondivisionsSource:Companyreports;A.T.KearneyAnalysisTodevelopthenecessaryE-enabledoperations,services,processesandapplicationstomeetnewclientdemandsinthelogisticsindustryITInitiativesRationaleObjectiveDanzasCaseStudy UPShasinvestedinNetCel360,formedanalliancewithNetworkSolutionsanddevelopedasetofon-linetoolstoimprovee-commercecapabilitiesFormedstrategicalliancewithNetworkSolutionstotargetdomesticsmallbusinessesInvestedinNetCel360Ltd.,aPan-Asianproviderofe-commerceoutsourcingsolutionsDevelopedsystemsolutionsforhomegrocerydeliveryindustryFormedUPSe-Venturetoserveasinvestmentvehiclefortechnologystart-upsDeveloped,bye-Venture,UPSe-LogisticsasacombinationofERPordermanagementandfinancialsystemsalongwithwarehousemanagementanddemandplanningandforecastingsystemCreatedasetofonlinemodules,theUPSOnLineToolsbasedonvarioustransportationandlogisticsrequirementsofclients,somedownloadablefromwebsiteDevelopedmultipleweb-enabledapplicationswithlinkstothecompany’sERPsystemandallowingtrackingofeventsacrossthesupplychainToexpandUPS’e-businessproductandserviceofferingsTocapturerapidlygrowingB2Be-commercemarketinAsiaTotakeadvantageoffastgrowingconsumerdirecthomedeliveryindustryToidentifyandrapidlydevelopentirelynewbusinessrelatedtosupplychainmanagementande-commerceToofferconfigurabletoolsforcustomerstoadapttotheirindividualneedsTohelpcustomersstreamlinetheirbusinessprocessesandimprovebusinessrelationshipwiththecarrierToexpandcapabilitiesinofferingoptimizedsupplychainmanagementservicesSource:Companyreports;A.T.KearneyAnalysisTobecomeanE-commerceservicescompanybycontinuallyaddingonmoreservicesthroughinternetITInitiativesRationaleObjectiveUPSCaseStudy FedExhascreatedaportal,investedinTradeCompass,andformedallianceswithSAPandKPMGtoboostitscapabilitytomanagedigitalsupplychainsCreatedapowerfulFedExinternetpackageshippingportalonNetscape’sNetcenterInvestedinG-Log,aglobaltransportationmanagementsystemsproviderFormedstrategicalliancewithSAPtodevelopandmarketa“one-stop”portfolioofsupplychainservicesFormedstrategicalliancewithKPMGtodelivercompletesupplychainsolutionstolargeandmid-sizedcompaniesInvestedinTradeCompass,acompanyspecializingininternationaltradeinformationToacquirenewcustomersandgeneratenewrevenuesourcesontheinternetToincorporateG-Log’sweb-basedsystemintotheFedEx’sglobalsupplychainsolutionTomeetthegrowingdemandforsingleintegratorfortheentiresupplychainToleverageKPMT’ssupplychainconsultingande-integrationskills,whichcomplementsFDX’slogisticsserviceexpertiseToaddnewcontentofinternationaltradetoitsinformationserviceportfolioToturnNTE’scapabilitytowidercommercialuseSource:Companyreports;A.T.KearneyAnalysisBecomeaninfomediarybetweenacompanyanditssupplychainonaglobalbasisITInitiativesRationaleObjectiveFedExCaseStudy Appendix MaerskLogisticsUS$900MnMaerskLogisticsTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameMaerskLogisticsofferingsinclude:Oceanfreight,airfreight,warehousinganddistributionForecastofinventoryandsourcingofrawmaterials.Managefreightpayments,customduties,lettersofcredit.DevelopedINTRA,acommoncarrierplatformfore-commercethatincludesbooking,trackingcapabilitiesDevelopedaManagementInformationSystemcalledM*Power.ItTrackscargofrompurchasetodistribution.Hasorderupdates,notificationofexceptionsOfferspresetcorrectivemeasurethatareestablishedbetweenMaerskLogisticsandcustomerLinksvendorsatorigintostartthemanagementprocessofthesupplychainMaerskLogisticsworkswithinternationalshipperstoreducethetotallogisticscyclefromproductiontodeliveryRepresentedin70countries.Includesthefollowingfacilities:6officesinCentralAmerica,thecaribbeanandMexico.13officesinChina3distributioncentersinCalifornia.250,000sqfootfacilityinNorfolk,VA.FacilitiesinSeattleandAtlantaSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis NOL/APLUS$4,612MnUS$479MnAPLTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameWiththeacquisitionofGATXbecamethe12thlargest3PLintheUS(measuredbyrevenues)Theacquisitionadded21MnSquarefeetofdistributionspaceNorthAmerica:19,897,000sqftMexico:145,000sqftCanada:260,000sqftChile:480,000sqftPuertoRico:80,000sqftCostaRica:100,000sqftArgentina:38,000sqftAPLServicesdividedinfourgroups:Consolidation:groupshipmentstogetherIntermodalmanagementservicesContractlogisticsconsulting:DesignedsolutionstoimprovethesupplychainAutomotivelogistics:SpecializedservicesforautomobilecompaniesSupplychainservicesfromend-to-end,startingfromsourcingallthewaytofinishedgoodsdistributionAtorigin:delivertowarehouse(oftentheirown).CantakecareofdocumentsofnecessaryConsolidation:Ifitdoesn’ttakeupafullcontainertheywillgroupwithothershipmentsTransportation:Bysea,air,intermodalDestination:Warehousing,orderprocessing,orderpicking,transportationOffercustomizedeventandexceptionmanagementsolutions115warehousesin55countries,includingNorthAmerica,LatinAmerica,Europe,South-EastAsiaandChinaClientcanfollowproductonlineattheSKUlevelLessthan50%ofAPLLogisticsoutsourcedseatransportationneedsarecarriedviaAPLcontainershippingvesselsSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis NYKUS$10,300MnUS$1,500MnNYKTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameOfferslogisticsservicesthrough39companiesin21countriesinAsia,NorthAmerica,AustraliaandEurope.PlanstoexpandtoChina,EasternEuropeandLatinAmericaEmploysabout5000forthelogisticsbusinessesHasidentifiedlogisticsasaasacorebusinessOfferingsincludethefollowing:SupplychainmanagementfromsourcingtofinalsaleMinimizeinventoriesNYKwantstolinkalltransportmodes,includingsea,landandairWarehousingDistributionConsolidationForwardingNYKowns85warehousesanddistributioncentersaroundtheworld.ThedistributioncentersaremostlylocatedinEuropeSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis P&OUS$6,397MnPOCL:US$154MnPOTE:US$1,456MnPOTE&POCLTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyName2logisticsdivision:P&OTransEuropean(POTE)andP&OColdLogistics(POCL)POTE:SectorFocus:Industrial:21%Retail:5%ConsumerElectronics:21%Automotive:25%Petrochemical:25%Other:3%800,000sqfeetofwarehousingandstoragein160locationsintheUKandContinentalEurope1200Trucksand2600trailerunitsHasdedicatedfacilitiesforclientssuchasOpel,GM,DowChemicalPOCLAustralianmarketleader(54%)forchilledfooddistributionfacilitiesand6thbiggestworldwideHighlyautomatedConsolidatesshipmentsanddeliversJITtosupermarketsfromdirectdatafeedsManagesstocksandsalesdatabaseAlsohasstrongpresenceinNewZealandandSouthernUSComment:Noclearstrategicdirection.Thecompanyisnottryingtodiversifyorgrowitslogisticsactivitysignificantly.DoesnothaveaglobalpresenceSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis Hapag-LloydEURO940MnEURO166MnEURO329MnVTG-LehnkeringPrachtFreightForwardingFrenchAlgecoTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameLogisticsisconcentratedamongthreecompanies:VTG-Lehnkering,PrachtFreightForwarding,FrenchAlgecoVTG-Lehnkering:Ownscustomizedequipmenttotransfershipmentsbyroad,railandwaterways.Specializesinoil,chemicalandpetrochemicalindustriesPrachtFreightForwarding:Offeringsinclude:ConsolidationWarehousingDistributionAlgeco:Produces,sellsandleasescontainermodulesHapag-LloydhastransportdataautomaticallyfedintoitsWebsite.Hapag-Lloydhasthefollowingonlinecapabilities:CargobookingTrackingPrintingofimportdocumentsSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis MOLUS$8,300MnUS$652MnM.OAirSystemCougarHoldingsPTELtd,M.O.LogisticsNetherlandsB.V.HongKongLogisticsTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameMOLhasmanylogisticscompaniesandoperationsworldwide.Itisintheprocessofconsolidatingthemtobetterleverageitsresourcesglobally.TheentitywillbeknowasMOLLogisticsOfferforwardingandwarehousingservicesAssistscustomersinestablishingsupplychainmanagementsystemsHasaprominentpositioninEuropeinthedistributionofwinesandspiritsOperatespartscenterforBMWinSoutheastAsiaSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis OOCLUS$2,400MnOOCLTotalCompanyRevenuesFY2000LogisticsRevenuesLogisticsCompanyNameCargoSystem,OOCL’slogisticsarm,providesspecializedsupplychainmanagementsolutionstoitsclientbase.Ithas59officesandiswellestablishedinmainlandChinaOOCLdevelopedCargoSmart,aninternetportalthathasthefollowingcapabilities:BookingTrackingAccesstodocumentationScheduleenquirySource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis GeneralcommentsfromCOSCOandA.T.KearneyRemarksStudyonpartnershipopportunitiesforLogisticsBUwillbeidentifiedinaseparateworkstreamPleaseprovideanalysisonpartnering/allianceopportunitiesforlogisticsbusiness,includingpotentialpartneringareas,targets,andfeasibility(considerbothlogisticsandITcompanies)PendingfurtherdiscussiononscopeandprojectprioritiesLogisticsbusinessisproductcenteredbusiness,pleaseprovidestudyonmarketdemand,competitiveenvironmentandtrendsbyproduct:Keyproductgroupsinclude:Auto(CKDandOEM),homeappliance,exhibition,retailgoods,distributioncenter(China),shippingagency,etc.ATKRemarksCOSCOCommentsPendingfurtherdiscussiononscopeandprojectprioritiesIntroductionofITsuppliersforlogisticsbusinessModifiedaccordinglyDetailedcommentsonP68 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