Over 400 of the world's top 500 firms are now investing in production facilities in the Yangtze River Delta (YRD), while many regional headquarters, R&D centres and sourcing centres have also been set up in the region. The YRD logistics market, growing at an average annual rate of 30%, offers enormous opportunities to industry players.
With an estimated investment of Rmb1 billion, construction of the logistics base of the Transfar Group started recently in Suzhou. Also making investments in other YRD cities like Ningbo, Jiaxing and Shanghai are international giants such as AMB of the US, Goodman of Australia, and Mapletree of Singapore. The aggressive moves by both foreign-invested and mainland private enterprises are turning the YRD logistics market into a "gold mine".
Following the expansion of the Transfar Group into Suzhou, Zhang Guobiao, president of Shanghai Forchn Development Industry (Group) Co Ltd, set his sights on the logistics of river ports. The group does not only have the right to develop a section of the Huangpu river bank, but has also developed logistics parks in the ports of Changzhou, Zapu (Jiaxing) and Chongxian (Yuhang), paving the way for the development of its logistics business in the YRD.
Meanwhile, Delixi Group which is known for producing low-voltage electrical appliances is teaming up with other partners to explore opportunities in the YRD logistics market. And another 30 small- and medium-sized Zhejiang industry players have jointly invested Rmb15 million in setting up the Huangjin Dadao Freight Company in Wuxi'a Huishan development zone.
The influx of mainland private enterprises has wrecked the nerves of foreign firms. On 25 October 2007, the world's second largest logistics group, AMB of the US, established its first China logistics project a 37,000 sqm distribution centre in the Ningbo economic and technological development zone. The company has also invested over US$30 million in two other logistics projects in Kunshan, Jiangsu. Also in late October, Australian logistics giant the Goodman Group launched a US$29.99 million industrial warehouse project in the Jiaxing economic development zone. Subsequently, Goodman and the Mapletree Group of Singapore acquired 47,000 sqm and 50,000 sqm of warehouse facilities in Shanghai's northwest industrial park respectively.
The aggressive moves of private and foreign firms are rapidly changing the landscape of the YRD logistics market. For instance, Transfar Group's drive to build a fourth-party logistics (4PL) platform is aimed at uniting the disparate efforts of third-party logistics (3PL) service providers and integrating their resources thereby cutting logistics cost effectively. As foreign logistics firms are all multinational 3PL players, their advanced management expertise, sophisticated business model and strong financial background are catalysts for the upgrade and higher value-added of the logistics industry. Although private and foreign logistics firms leverage on different strengths, they are both contributing to the transformation of the YRD logistics industry from traditional freight forwarding to a modernised sector.
