As part of its Asian expansion plan, CEVA Logistics, a leading supply chain company, has opened its new air freight hub at Hong Kong International Airport in Chek Lap Kok. With this development and together with its China business expansion, the company expects todouble its business growth rate by 2010.
According to CEVA’s chief executive officer John Pattullo, who was on a recent two-day visit to Hong Kong to officiate the air freight hub opening, the company’s new facility will provide an annual capacity of 145,000 tonnes.
“The new hub with direct airside access will enable the handling of larger air freight volumes more efficiently, and the Hong Kong warehouse will be used to consolidate import and export freight shipments for both south China and Hong Kong,” he said.
Explaining the company’s history, Pattullo said CEVA was formed in 2006 when Apollo Management, a private equity group, acquired the logistics division of TNT. The company, which was then renamed CEVA, acquired EGL Eagle Global Logistics, and both companies merged in mid-2007.
Asked why CEVA had picked Hong Kong for its new hub, Pattulo said this was because the territory would provide lots of growth opportunities and was a good location for export goods from Mainland China.
According to analyst Brad Setster of Asia Economonitor, China’s export growth between January and May this year was up 22 per cent year-on-year, and projected along with the 31 per cent import growth, the country’s trade surplus would shrink only modestly, but would still be recordingUS$240 billion in trade.
Organic growth
Vittorio Favati, president of CEVA Asia Pacifi c Holdings Company Pte Ltd, said CEVA Logistics, which started operations in China in 1988, expected its business to grow organically in the mainland where its integrated business offers contract logistics, freight management, domestic transportation service and internationallogistics solutions.
CEVA’s joint venture – Anji-TNT – a 50:50 JV between Shanghai Automotive Industry Sales Corporation (SAISC) and finished vehicles and aftermarket solutions to the automotive industry in China and it was doing very well.
The company’s other integrated service in China is freight forwarding services, which includes air, ocean and groundbased transportation, and other freight transportation-related services such as customs brokerage, local pick-up and delivery service, materials management and trade facilitation.
With annual revenue of Euro 700 million in 2007 from the China market and current growth of over 25 per cent for 2008, the launch of its new freight hub in Hong Kong is part of CEVA’s China investment strategy to double its business in two year’s time, Pattullo said. This compares with the 12-15 per cent logistics growth in the China market, and global logistics growth of 7.5 per cent a year.
CEVA’s logistics business worldwide amounted to US$8 billion in 2007, and of the fi gure, Asia accounted for US$2 billion and China US$1 billion.
Logistics growth rapid
“In China, the contract logistics business is underdeveloped,” Pattullo said, adding that globally, 40 per cent of global logistics businesses in developed countries are outsourced, while the mainland’s percentage is very low comparatively. Nevertheless, China’s logistics business is growing faster than that of the rest of the world, he added.
CEVA’s contract logistics services for the automotive industry in China is well balanced, with 60 per cent involving inbound cargo and the remaining 40 per cent outbound.
CEVA has 600 leased facilities to support its mainland China network, which are served by a fleet of about 100 of its own trucks. In Shanghai, the company operates four break-bulk hubs which cover about 100 cities.
Asked whether CEVA was considering any mergers or acquisitions, Pattullo said it was interested only in small acquisitions, but nothing major.
Asian presence Outside China, Favati said CEVA operates in 14 Asian countries, including the Philippines and Vietnam, where it is focused in freight management. Th e company is in the process of bringing contract logistics to these countries.
In India, CEVA is poised to make an entry into the country’s automotive industry, which is under developed compared with China and the USA.
“We will bring our best in class services and expertise to India. We are now talking to the largest automotive players in the market,” Pattullo said, adding that CEVA would not announce its plans until 2010 when they are finalised.
Another market under CEVA’s microscope is the Middle East where it is steadily meeting industry’s needs.
Thailand Vehicle Logistics
In Thailand, CEVA Logistics has also launched a new division – Vehicle Logistics – to complement its contract logistics and freight management operations in the region.
Providing services nationwide, CEVA Vehicle Logistics (Thailand) targets car dealers, automotive manufacturers, auction houses and finance companies. The new division can move up to 880 cars at one time, and has a storage capacity of up to 20,000 cars.
Mark Thornton, section general manager, CEVA Vehicle Logistics (Th ailand), pointed out that customer needs are changing, and more companies are looking for alternatives to self-drive delivery of vehicles.
Using a fleet of 150 vehicles and 400 workers, CEVA has already carried out more than 98,000 car movements sinceApril 2008.
