IDS Logistics Buys Into US Market

Wednesday, December 6, 2006 2:02
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While generally speaking the logistics market in China is a mess, there are a few companies that have been able to put together strong networks within China. Traditionally, these companies were either large SOE providers (China Post, Sinotrans, China Merchants, and others) or were internal logistics units (Haier & TCL).

In the past 3-5 years (depends on region) though, a number of companies have been able to put together strong networks in China and look for opportunities to expand beyond the borders of China.

So it should not come as any big surprise that IDS Logistics (a subsidiary of Li & Fung), has just announced the purchase of US Impac Logistics, a specialized logistics provider in the garment industry.

It is a sign of things to come, and for the Li & Fung Group (China’s largest trading, sourcing, and outsourced manufacturing company) there will be huge benefits all over the place from this deal on the cost and revenue side of the equation.

Outside of the savings that will result from the integrated network, Li & Fung as a group will be able to purchase raw materials on behalf of clients, manage the manufacturing, and then management the movement of goods from manufacturing site to retailer…. potentially on a massive scale.

IDS is surely not going to be the first nor the last company to do this and there are several Chinese consolidators in the market fishing for partnerships in the United States and E.U. that will create the foundation for their future growth.

To learn more about the deal, see Fibre2fashion; IDS Announcement (PDF);

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