Australia-based transport and logistics specialist, the Toll Group, has established Toll Global Forwarding to head its forwarding operations in Asia and globally. The Toll Group launched a takeover of BALtrans Holdings Limited on December 20, 2007, a deal estimated to be worth nearly A$365 million (US$313 million). Following the completion of the acquisition in April, BALtrans has since been de-listed from the Hong Kong Stock Exchange and become a wholly-owned unit of Toll Global Forwarding.
The Group has named its director business development, Hugh Cushing as CEO of Toll Global Forwarding and, also as acting CEO of BALtrans. Effective June 1, 2008, Cushing will take over the reins of BALtrans from acting CEO Anthony Lau – one of three founders of BALtrans – who will then onwards act as advisor.
“The Group will have three major areas of focus,” says Cushing. Firstly, Toll will continue to develop its Australia-New Zealand domestic transport and logistics business; and secondly, its Asian logistics business development led by Singapore- headquartered Toll Asia – the rebranded SembCorp Logistics which the Group acquired in 2006. Thirdly, the Group will focus on freight forwarding and international supply chain services led by Toll Global Forwarding, with its headquarters in Hong Kong.
A growing Asian 3PL market
According to 2006 Datamonitor Plc report, the largest demand growth for third party logistics (3PLs) is expected to occur in Asia-Pacific which is forecast to account for almost one-fifth of global spending on 3PL services by 2010. In 2005, Asia Pacific accounted for 34 per cent of the global logistics market’s value, with Europe and the Americas accounting for the remaining 66 per cent.
By 2010, Datamonitor expects Asia-Pacific to further consolidate its market lead to 38 per cent of the global market value. A cumulative annual growth rate (CAGR) of 6.6 per cent is forecast for the Asia-Pacific region for the period from 2005 to 2010, more than double the 2.9 per cent CAGR anticipated for the rest of the world.
In recent years, many multinational and Asian logistics players have expanded or are starting to expand in Asia to support the growing presence of their international clients in Asia, including the Toll Group. Infrastructure development and increased consumer consumption in the region are expected to fuel logistics operators’ business which is likely to translate into positive demand for logistics services in the respective Asian markets.
According to an IDC report, the Asian logistics market is expected to show faster growth rate of over 50 per cent, from the present 40 per cent, in world airfreight cargo in the next 20 years, while logistics outsourcing in both China and India is forecast to grow at over 40 per cent annually in the next 10 years.
High hopes for Toll Asia
Toll is moving quickly to secure a leading position in Asia. Cushing says: “We think there are great opportunities for growth in the forwarding market, and in our logistics business, and we are looking at Asia and China particularly where we see significant growth over the next two or three years”.
Toll, the largest listed air freight and logistics firm in Asia Pacific by market value, is among the top 20 freight forwarding companies in Asia and is also among the top 20 logistics services providers in the world. Through mergers and acquisitions Toll has US$1 billion revenue from freight forwarding and an average US$8 billion annual turnover. Its principle focus now, is continued growth of BALtrans’ business.
The group expects Toll Asia’s revenues to increase significantly in the next two years as the business harnesses Toll’s extensive expertise in logistics, unique supply chain technologies and extensive infrastructure assets which include warehousing, road fleets, ships, rail rolling stock and air freight capacity, to create innovative cross-border supply chain solutions.
Following the BALtrans acquisition, the group’s key priority is the integration of the two businesses. Its plans include the integration of its land logistics with its freight forwarding capability, which is complementary to its logistics services. The group plans to take advantage of BALtrans’ significant position in the Asian market, as well as entering the US and European markets.
BALtrans, which has a strong export business from Asia to Australia and New Zealand through its agent Gluck, offers a complementary business to Toll’s export business from Australia-New Zealand to Asia.
In the rapidly growing China market, BALtrans has 10 offices while the Toll Group has 35 offices. By combining their capabilities, the group expects substantial growth from the mainland market in the next five to 10 years as it taps economies of scale.
In 2007, BALtrans Hong Kong recorded handling 54,000 tonnes of airfreight, up 14 per cent year-on-year. Between January and March this year, BALtrans handled 11,500 tonnes of airfreight, an increase of 10 per cent versus the same period last year, Lau says.
“On a global basis, the BALtrans as a group would have handled four times that tonnage last year as well as during the first
quarter of this year,” he adds. The Toll Group, which has invested significantly in technology to enhance its forwarding capability said it will expand its technology to BALtrans’ operations and assist the business to grow rapidly.
