Logistics Market – China November 2014
Executive Summary Market
Drivers & Challenges
Government Initiatives
Trends
Logistics market value in China is expected to reach USD 55.1 tn by 2018 from USD 28 tn in 2012, growing at a CAGR of 11.9% Industrial products accounted for a major share of 91.4% of the logistics market value in 2012 Challenges: Drivers: - Rise in Logistics Costs Due to Low Efficiency - Healthy Economy - Lack of Modern Logistics Facilities - Rising Income and Increasing Domestic Consumption - Inadequate Warehouse Space - Growing E-commerce Business - Regional Protectionism - Manufacturers’ Shift to the West - Constraints in Human Resources - Strong Retail Sales - Preference Towards Self Management - Opportunity from Cold Chain Logistics - Opportunity from Pharmaceutical Logistics Reorganization of Logistics-Related Administrative Institutions in 2008 Fragmented Regulatory Framework Development Plan of Commercial Logistics (2011) Logistics Key Focus Areas under the 12th Five Year Plan (2010-2015) Medium-and Long-term Development Plan of Logistics Industry (2012-2020) Seven point plan for (2014-2020) Development of National Transport Infrastructure Market Consolidation Logistics Outsourcing Inland Expansion of Third Party Logistics Rising Investments Major Players
Competition
Sinotrans Ltd.
FedEx Corporation
LOGISTICS MARKET IN CHINA 2014.PPT
DHL Logistics Pvt. Ltd. 2
•Macroeconomic Indicators •Introduction •Market Overview •Drivers & Challenges •Government Initiatives •Trends •Mergers & Acquisitions •Competitive Landscape •Strategic Recommendations •Appendix LOGISTICS MARKET IN CHINA 2014.PPT
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Macroeconomic Indicators (1/3)
SAMPLE
Current Account Balance USD bn f6
400 300
a1
200
b2
c3
d4
20--
20--
20--
e5
100 0 20--
20--
20--
Exchange Rate: Half Yearly Period Average
USD/INR
Period High
Period Low d1
c1
d3 a1
6.08
a3
1/1/14
d2
c2
b1
a2
e1
b2
e2 e3
c3
b3
2/1/14
3/1/14
LOGISTICS MARKET IN CHINA 2014.PPT
4/1/14
5/1/14
4
Logistics Industry Framework
SAMPLE
Load Logistics Provider (LLP)
Contract Logistics (3PL) Professional Services
Courier
Value Added Services, Warehousing, Transportation, Distribution
Postal / Mail Services
Consulting, IT Systems Integrators, SCM Application Providers
Equipment Providers
Airports
Cargo Rail Companies
Cargo Airlines Regulator (Government Authorities, Industry Association)
Railways Logistics related Financial Services
Express Shipping Companies
Sea and Inland Ports
Infrastructure Carriers
Parcel
Delivery Type Service Providers
4PL Road/ Highway Providers
Trucking Companies LTL / FTL Freight Forwarding Road LTL / FTL, Air Freight, Sea Freight, Rail Freight
Note: LTL refers to less than truckload, FTL refers to full truckload, 3PL refers to Third-Party Logistics, 4PL refers to Fourth-Party Logistics and SCM refers to Supply Chain Management LOGISTICS MARKET IN CHINA 2014.PPT
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Logistics market in China is exhibiting rapid development with annual double digit growth expected through 2012-18 Logistics Market – Overview
Logistics Market Value and Growth
• Logistics industry is acting as a bridge between the value chain from production to sales
USD tr
• It plays a key role in China’s smooth economic development
r q
11.9%
a1
a2
a3
20--
20--
20--
a4
a5
a6
• In 2012, the logistics demand coefficient which is the logistics industry’s value to GDP ratio, was 3.4, which is higher than the coefficient in 2011, implying a steady growth in the logistics market
p
• Booming manufacturing sector is the main factor behind China’s economic development
Logistics Market Value Category-wise
a7
0
Industrial products have the maximum value in the country’s total logistics value
x2 x4 x5 x3
20--
20--
20--
Segment 1 Segment 2
• Logistics industry is highly dependent on transport facilities for its growth Growth in the logistics industry will accelerate the network and density of the five major segments of the market – express, road freight, air freight, contract logistics and international freight forwarding
20--
Segment 3 Segment 4 Segment 5
x1
2012 LOGISTICS MARKET IN CHINA 2014.PPT
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Drivers & Challenges – Summary
Challenges Drivers Healthy Economy Rising Income and Increasing Domestic Consumption
Rise in Logistics Costs Due to Low Efficiency Lack of Modern Logistics Facilities Inadequate Warehouse Space Regional Protectionism
Growing E-commerce Business Constraints in Human Resources Manufacturers’ Shift to the West Strong Retail Sales
Preference Towards Self Management
Opportunity from Cold Chain Logistics Opportunity from Pharmaceutical Logistics
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Government has implemented certain measures to reorganize the regulatory structure of the logistics industry
SAMPLE
Reorganization of Logistics-Related Administrative Institutions in 2008
• In 2008, there was a major reorganization at the ministry level to streamline government bodies associated with the transport system • Ministry of Transport was established by consolidating the functions of a number of government departments regulating civil aviation, postal services, communications and urban public transportation According to China’s new Postal Law which became effective on 1st Oct 2009, only China’s state owned post offices can deliver domestic letters and documents – This law also imposes a minimum capital requirement of ~USD72,963, indicating the exit of small players from the market
Ministry of Communications Civil Aviation Administration of China Urban traffic management under the Ministry of Construction
State Bureau of Civil Aviation Functions merged
Ministry of Transport
Under Purview of State Post Bureau
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Trends – Summary Development of National Transport Infrastructure
Market Consolidation
` Key Trends
Logistics Outsourcing
Inland Expansion of 3PLs
Rising Investments
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SAMPLE
Porter’s Five Forces Analysis
Impact x Threat of New Entrants
Impact x
Bargaining Power of Suppliers
Impact x
Competitive Rivalry
Impact x
Bargaining Power of Buyers
Impact x
Threat of Substitutes
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SAMPLE
Competitive Benchmarking (2/5)
Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/3) Operating Margin
%
Net Margin
40 30
a1 b1
20 10
a2
b2
a3
b3
0
Company A
Company B
Company C
• Company A recorded operating margin of x1%, higher than that of Company B which recorded operating margin of y2% but lower than that of Company C which recorded operating margin of z3% • Net margin for Company A , Company B and Company C are a1%, b2% and c3% respectively, wherein Company A has the highest net margin among these three companies
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Public: Domestic Company – Company 1 (1/5)
SAMPLE
Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange
Mumbai
Head Office
Products and Services Category
Products/Services
Key People Name
Designation
Person 1
MD and Executive Director
Person 2
VC and VC of Share Transfer Committee
Person 3
Director
Person 4
Director
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Public: Domestic Company – Company 1 (2/5)
SAMPLE Key Ratios
Financial Snapshot Total Income
d
z1
s
a3
a1
r
c b
a4
a2
e
Particulars
Net Profit/Loss
z2
z3
z4
a
q p
2010
2011
2012
2013
Financial Summary • The company earned a net profit of INR x1 mn in FY 2013, as compared to net profit of INR x2 mn in FY 2012 • The company reported total income of INR y1 mn in FY 2013, registering an increase of y2% over FY 2012 • The company earned an operating margin of z1% in FY 2013, an increase of z2percentage points over FY 2012 • The company reported debt to equity ratio of a1 in FY 2013, an increase of a3% over FY 2012
2013
2012
2011
2010
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Key Financial Performance Indicators Indicators
y-o-y change (2013-12)
Value (20/03/2014)
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
LOGISTICS MARKET IN CHINA 2014.PPT
Decline
13
Public: Domestic Company – Company 1 (3/5)
SAMPLE
Key Business Segments Segment 1 C%
a1%
B%
b1%
Key Geographic Segments
Segment 2
b2%
Region 1
b3%
b4%
A%
Region 2
C%
x1%
B%
y1%
x2%
x3%
x4%
2010
2011
2012
2013
A% 2010
2011
2012
2013
Business Highlights Description
News
Overview
• The company has operations in Country A, Country B and Country C that offers treatment for acute and chronic diseases in primary, secondary and tertiary care sectors
• Specializes in 50 specialties comprising cardiac sciences, oncology, radiology and imaging, Services
gastroenterology, neurosciences, orthopedics, critical care services and in minimally invasive surgeries and transplantation
• Operates retail pharmacy outlets all across the country
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Public: Domestic Company – Company 1 – SWOT Analysis (5/5)
SAMPLE S
W
O
T
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