WSJ Long Haul Coverage

Wednesday, October 25, 2006 16:12
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In the last week, Mei Fong of the Wall Street Journal has been busy covering issues surrounding the long haul logistics market of China. The coverage, much like that of Robert Malone at Forbes a couple weeks ago (China Manufacturing and Logistics), is very good on the high altitude level and will give readers another entry point to learn about some of the difficulties of logistics in China.

The first article Retail’s One-China Problem, is written really as an overall retail piece with a slant of covering the issues that Wal-Mart will face. In the article, a few key issues related to long haul and China-wide logistics are brought up that deserve mentioning:

  • There is still not a network in place that can deliver from “farm to shelf”
  • Refrigerated trucks in China are scarce, and that inhibits centralized buying efforts

For more analysis on this article, go to Asia Logistics Wrap

However, it is in her second article Long-Haul Trucking Takes Off in China that the meat of the coverage on long haul occurs, and where readers will gain a better perspective on the moves that carriers are beginning to make.

Highlighting primarily the movements by Schneider and YRC (Yellow), the focus is on how exciting and promising the market is, and that in order to fully convert on investments a number of challenges lie ahead of them.

What is most interesting to me in reading this article is Schneider’s intention to go it alone (a move I wholly support as JVs in this industry have been difficult to say the least). The investment that will be required will be huge, and I can only hope that they have customer(s) who have already committed to taking full lane and warehouse space in order to minimize the massive risk of underwriting the venture.

Most of the providers I have met and have come to know are intent on a national network, and view it as a competitive advantage, but few plan to own much of it due to the complexity and level of investment.

As shown in our own report (Long Haul Review and China’s Transportation Network Map), the market for long haul logistics is not only huge, but the challenges are monumental as well.

In addition to the two companies highlighted in the article, I would also keep my eye on UPS, FedEx, and DHL on the international side; Kerry EAS, Semcorp, HTB Logistics and other regional Asia carriers; and Shanghai Beifang, ST Anda, and Annto Logistics locally.

Each of these companies has publicly made moves to be the first one across the line, and some have put together some comprehensive networks that will only grow and strengthen in the future.

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