July,2001COSCO IPO SUPPORT MATERIALSLogistics Services Industry Environment & Trend Analysis- COSCO Comments and A.T. Kearney RemarksThecontentsofthisdocumentwerepreparedbyA.T.Kearneyandmaynotbeused,alteredordisclosedtootherparties,withoutthewrittenpermissionofA.T.Kearney. TheinformationcontainedinthisdocumenthasbeenobtainedfromexternalsourceswhichA.T.Kearneybelievesarereliable.However,A.T.Kearneycanmakenorepresentationastotheaccuracyorcompletenessoftheinformationorprojectionsderivedtherefrom.8Point/FinalVersion/LogisticsIndustryOutlook-final/2Table of ContentsnExecutive Summary1.Market Size & GrowthGlobalChina2.Service DemandGlobal TrendsChina Trends3.Competitive EnvironmentGlobalChina4.Regulatory Environment5.Information TechnologynAppendix8Point/FinalVersion/LogisticsIndustryOutlook-final/3Executive Summary8Point/FinalVersion/LogisticsIndustryOutlook-final/4A.T. Kearneys definition of the logistics services industryStructuring and managing, on behalf of cargo owners, solutions involving some combination of parts of the supply chain (i.e. transportation, warehousing, (de)consolidation, etc.)8Point/FinalVersion/LogisticsIndustryOutlook-final/5The logistics service industry represent a tremendous growth opportunity, both globally and in ChinaMarket CharacteristicConclusionCustomersareincreasinglydemandinghighvaluelogisticsservicesolutions,requiringglobalreachandadvancedsupplychainmanagementcapabilitiesIncreasingdemandforglobalreachandcapabilitiesfuelsconsolidationaslargefullserviceprovidersarepositioningthemselvesforsuccessChinasentryintoWTOisexpectedtohavetwomainimplications-thelogisticsmarketwillgrowrapidly,andcompetitiveintensitywilldramaticallyincreaseStrongITcapabilitiesisbecomingacorecapabilityoflogisticsservicesprovidersandiscriticaltobuildingalogisticsservicesbusinessMarket Size & GrowthService DemandCompetitive EnvironmentRegulatory EnvironmentInformationTechnologySource:A.T.KearneyThegloballogisticsservicesmarketreachedanestimatedUS$190Bnin2000.TheChinamarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyatCAGR35%overthenextfiveyears8Point/FinalVersion/LogisticsIndustryOutlook-final/6The China logistics industry will be shaped by Chinas entry into the WTO and the subsequent opening of the market to foreign competitionIndustry Scenario 2006RapidincreaseinM&AactivitiesKeyalliancesformedwithinthenext2-3yearsRapidexpansionofglobalplayersofferingsophisticatedend-to-endsolution,includinglogistics,transportationandITImplementationofe-commerceinitiativesandincreasingdependenceonITnetworkMergers, Acquisitions and AlliancesGlobal CompetitorsTechnologyThelogisticsmarketwillgrowrapidlyCompetitiveintensitywilldramaticallyincreaseWTO EntrySource:A.T.Kearney8Point/FinalVersion/LogisticsIndustryOutlook-final/71. Market Size & Growth8Point/FinalVersion/LogisticsIndustryOutlook-final/8The global logistics services market reached an estimated US$ 190 Bn in 2000nThegloballogisticsoutsourcingmarketisestimatedtoUS$190Bnin2000nThetransportationandrelatedexpendituresmarketreachedanestimatedUS$3.8Trillionin2000,andisexpectedtogrowatanannualrateof2.3%overthenext5yearsnTheAsianlogisticsoutsourcingmarketisestimatedtoreachUS$31Bnin2001andisexpectedtogrowatCAGR39%overthenextfiveyearsnThegreatestopportunitiesforoutsourcingareintransport,warehousing,andtransportmanagementnThegrowthofthegloballogisticsservicesindustryismainlydrivenbyshipperspropensitytooutsourcelogisticsservicesandorganictransportationmarketgrowthnCustomerelectronics,automotiveandapparelrepresentthemostattractiveopportunitiesforlogisticsservicesinChina8Point/FinalVersion/LogisticsIndustryOutlook-final/9The China market is still small at US$ 0.61 Bn, but will be growing rapidly at CAGR 35% over the next five yearsnTheChinalogisticsservicesmarketisstillsmallatUS$0.61Bn,butwillbegrowingrapidlyoverthenext5yearsnThelogisticsservicesindustryisstillatanearlystageofevolutioninChinanThetransportationandrelatedexpendituresareproportionatelyhigherinChinathaninmostdevelopedcountriesandNIEs-indicatingamajorimprovementopportunitynInCoastalChina,demandforlogisticsservicesisexpectedtobestronginGuangdongandShanghainInInlandChina,thelargestdemandpotentialisinSichuanandtheHubei/YangtzeriverregionnGrowthinthelogisticsservicesindustryinChinawillmainlybedrivenbycontinuedmacroeconomicgrowthandincreasedpropensitytooutsourcelogisticsFavorablemacroeconomicoutlookPublicpolicyandspendingIncreasinginterestinoutsourcingforlogisticsneedsGrowingITandE-business8Point/FinalVersion/LogisticsIndustryOutlook-final/10Market Size & Growth - Global8Point/FinalVersion/LogisticsIndustryOutlook-final/11The global logistics outsourcing market is estimated to US$ 190 Bn in 2000Source:Chinainfobank,CSFB,A.T.KearneyGlobal Transportation and Logistics Market Size (2000)Transportationandrelatedactivitieshandledbymanufacturers,wholesalers,retailersthemselves(e.g.privatefleet,privatewarehousing)Discretesetsoftransportationandrelatedservicesoutsourcedbymanufacturers,wholesalers,retailers(e.g.publicwarehousingetc.)Combinationof“transportationandrelatedservices”provisionedby3rdpartylogisticsserviceprovidersUS$ 3,800 BnOutsourcedUS$190 BnGlobal transportation and related expendituresGlobal outsourced transportation and related servicesGlobal logistics outsourcing market8Point/FinalVersion/LogisticsIndustryOutlook-final/12US$ BnThe transportation and related expenditures market reached an estimated US$ 3.8 Trillion in 2000, and is expected to grow at an annual rate of 2.3% over the next 5 yearsNote:(1)AsiaincludesJapan,HongKong,Korea,SingaporeandTaiwanSource:BowersoxandCalantone;CSFB;A.T.KearneyAnalysisTransportation and Related Expenditures by Region (2000)Transportation and Related Expenditures by Function (2000)US$ BnTotal = US$ 3,837 BnOthers: -1.4%Asia(1): 2.2%Europe: 2.6%North America: 4.0%3,4243,8374,389CAGR=2.3%CAGR=2.8%Warehousing$304BnTransport$2,204BnOthers$55BnShipper-Related$20BnInventory$1,102BnAdmin$152BnCAGR 2000-20068Point/FinalVersion/LogisticsIndustryOutlook-final/13The Asian logistics outsourcing market is estimated to reach US$ 31 Bn in 2001 and is expected to grow at CAGR 39% over the next five yearsNote:AsiaincludesChina,Japan,HonkKong,Korea,SingaporeandTaiwanSource: BowersoxandCalantone;CSFB;A.T.KearneyAnalysisLogistics Outsourcing Market in Asia - Gross Revenue(US$ Bn)CAGR(99-01)=38%CAGR(01-06)=39%8Point/FinalVersion/LogisticsIndustryOutlook-final/14The greatest opportunities for outsourcing are in transport, warehousing, and transport managementTransportWarehousingTransportManagementITSupplementaryLogisticServicesPurchaseOrderManagementLogisticsManagement30%47%48%85%20%40%39%76%23%2%5%16%ofrespondentsoutsourcing1998%ofrespondentsplanedoutsourcing200313%8%Outsourcing by FunctionResourcerequire-mentsComplexityNote:Thepercentagemaynotaddupto100%duetoroundingSource: BasedonseveralA.T.Kearneystudies,including:-Worldwidestudycomprising280participants(automotive19%,electronics25%,retail27%,chemicals29%)-Europeanstudycomprising500participants(retail26%,food&beverage26%,commodities22%,machinery12%,automotive7%,electronics&high-tech4%)8Point/FinalVersion/LogisticsIndustryOutlook-final/15Outsourcing of non-core business activitiesOrganic growth of transportation marketsIncreasedcomplexityofglobalsupplychainsRecognitionbymanyshippersthatsupplychainstrategymaybeakeycompetitiveadvantageWillingnesstooutsourcewhenlogisticsnotseenascorecompetencyDevelopmentofsuperiorlogisticscapabilitybyafew3PLsGrowthindemandfortransportationservicesexpandswithinternationaltradegrowthGlobalizationofmanyindustriesmeansgoodsneedtomoveoverlongerdistancesatfasterspeedswithhigherreliabilityGrowth in Logistics ServicesSource:UBSWarburg,IDCGrowth DriversDetails12 The growth of the global logistics services industry is mainly driven by shippers propensity to outsource logistics services and organic transportation market growth8Point/FinalVersion/LogisticsIndustryOutlook-final/16Consumer electronics, automotive and apparel represent the most attractive opportunities for logistics services in ChinaNote:1.Sizeofcirclerelativetosegmentsizein20002.AnalysisisindicativeonlySource: A.T.KearneyfieldinterviewsandresearchHighLowGrowth (2001-2006)RemarksHighlymarket-oriented,needquickresponsetoconsumerfeedbackManufacturershavetotoimproveoperationefficiencycontinuouslyduetointensecompetitionRelativelyhighproductvalueandlesspricesensitiveHighrequirementfortimingandreliabilityoflinersHighgrossmarginindustry,productioncostandlogisticsaccountforlesspercentageofsalesPrefertimelyfeedbackfromdestinationports,i.e.tradeconsultingservicesAutomotivesuppliesinvolveover30,000parts,whichneedconsolidatingsupplierstohandlelogisticsIntensecompetitiondrivescompaniestoreducecost,currentinefficiencyinself-handlingleadscompaniestoconsideroutsourcingservicesactivelyHighvalueproducts,notverypricesensitive,butsometimesdecisionsaremadeoverseasPackingrequirementinvolvestechnicaldifficulties,unwillingtooutsourcelogisticsservicesHighprofitindustry,notverypricesensitiveHighqualityrequirementfordry,nosmell,noleakingcontainers,hencecontainerizedinfactoryClearanceofcigarettesneedstobedonebyprofessionalI/EcompaniesormanufacturesLargeandspecialshape,thereforethewaytoputthemintocontainerscanimpactthenumberofcontainerstobeused,whichdirectlyrelatedtocost-usuallydonein-houseCostsensitive,firmsusuallychooselessbusyseasontogetcheaperpricesFrozenproductsandfreshproductsneedtobehandledfastwithcareOtherproductsarelow-valueandneednospecialservicesLowvalueproducts,highlypricesensitiveLowerqualityrequirement,usuallycontainerizedatportsConsumer ElectronicsApparelAutomotiveMachineryTobacco & LiquorFurniturePrimary GoodsChemicals&MaterialsIndustryLowHighConsumer Consumer ElectronicsElectronicsA ApparelpparelAutomotiveAutomotiveOutsourcing PropensityTobacco, Tobacco, LiquorLiquorPrimaryPrimaryGGoodsoodsOpportunity Assessment by IndustryChemicals Chemicals &Materials&MaterialsFurnitureFurnitureMMachineryachineryAdd market and trends analysis by industry8Point/FinalVersion/LogisticsIndustryOutlook-final/17Market Size & Growth - China8Point/FinalVersion/LogisticsIndustryOutlook-final/18The China logistics services market is still small at US$ 0.61 Bn, but will be growing rapidly over the next 5 yearsLogistics Outsourcing Market - Gross Revenue (2000, US$ Bn)Note:AsiaincludesChina,Japan,HongKong,SingaporeandTaiwanSource: BowersoxandCalantone;CSFB;A.T.KearneyEstimatesCAGR=35%190230.61China Logistics Service Market (US$, Bn)8Point/FinalVersion/LogisticsIndustryOutlook-final/19The logistics services industry is still at an early stage of evolution in ChinaCharacteristicsEmergingdemandforoutsourcedlogisticsservicesLowvalueaddedservicessuchastransportandwarehousingarethemajortypeofservicesoutsourcedTraditionalin-housebehaviourbeingimpactedFastgrowthoflogisticsuserbaseandhigherrequirementforbroaderservicesLargenumberofservicesproviderscompetingforcustomersandhumanresourcesMosthighvalueaddedservicesarefreeandprovidedassellingpointsLogisticsoutsourcingbecomescommonpracticeandanimportantleverforcompetitionConsolidatedservicemarketwithafewestablishedmarketleadersLogisticspenetrateinsupplychainandreplacetraditionalbusinessmodelsGloballogisticsintegratorsprovideone-stopsolutionworldwideSpecializationandclosecooperationamonggloballogisticsserviceprovidersOptimizedallocationandintegrationofresourcesalongthesupplychainStageEmergenceGrowthPenetrationGlobalizationWorld Leading(US)China TodaySource:A.T.Kearney8Point/FinalVersion/LogisticsIndustryOutlook-final/20Warehousing and DistributionTruckingRail FreightAlthoughHeavilyUsed,RailwayFreightHasLongTransitTimesandServiceReliabilityIsPoorRailwayContainersAreNotCompatibleWithShippingCompanyContainersAirlineCustoms BrokerageCourierLimitedPresenceofForeignFirmsAsJVE.G.DHLSinotransRegionalSegregationinOperationLogistics Center and Freight ForwardingShippingThedomesticwarehousingmarketiscurrentlysmallandover-suppliedwithbasicwarehousesprovidingvirtuallynovalue-addedservicesSomeconsolidationjuststartedamongthelargewarehousingcompaniesRivertransportationhasdeclinedMostvesselsarecharacterizedbylowspeedandhighenergycostsTruckingcompaniesareonlyallowedtooperateinrestrictedregionsGovernmenthasestablished15FreeTradeZonesandsomelogisticscentersaresetupthereInlandtransportationishandledbydomesticfreightforwarderwhoisusuallysub-contractedbytheinternationalfreightforwarderSevendomesticairlinesdominateregionaloperationsDesignatedforeigncarriersaregivenamaximumentitlementof50tonnesperweekManycustomsclearingbrokeragefirmsandconsiderableconfusionaboutrolesCustomsclearingprocedurestookatleast-1daypreviouslybutexpectedtobeshortenedto1hourThe logistics services industry is still at an early stage of evolution in China (continued)Source:A.T.KearneyAnalysisChina Logistics Services8Point/FinalVersion/LogisticsIndustryOutlook-final/21Transportation and related expenditures are proportionately higher in China than in most developed countries and NIEs indicating a major improvement opportunityTotal Transportation and Related Expenditures and % of GDP (2000) Note:(1)VAS:Value-added-services(2)Includingpackaging,admin,informationservices,ect.Source: BowersoxandCalantone,CSFB,IMF1997study;Chinainfobank;A.T.KearneyAnalysisUS$ BnChina Transportation and Related Expenditures Breakdown by Function (2000)Total = US$ 248 BnUS$ Bn(1)(2)8Point/FinalVersion/LogisticsIndustryOutlook-final/22Demand GrowthIn Coastal China, demand for logistics services is expected to be strong in Guangdong and ShanghaiHighLowHebei, Beijing, Tianjin4BeijingistheNo.1aircargocenterinChina.Inaddition,Beijingshi-techindustry,whichneedsalotofairtransportation,isdevelopingveryfastOver80%ofthevolumethroughTianjinportareagriculturalproducts,furniture,metalhardwareandrawmaterials,allbeinglowvalueproducts.Inaddition,mostshippersareinpoorfinancialconditionsandareverypricesensitiveShandong (Qingdao)4Qingdaohasseveralfamouslocalcompanies,suchasHaier,HiSense,AukmaandQingdaoBeer.TheyaremorequalityorientedandlesspricesensitiveFrozenproductsaccountfor15-20%ofthevolume.Qualityrequirementsforfrozenproductsareveryhighintermsoftimingandhandlingcare.Hence,frozenproductsshipperstendtobelesspricesensitiveandmorequalityconcernedFootwearandgarmentsaccountforsignificantportion.SomelargecustomerssuchasPaylessShoes(No.1customerofCOSCOinvolume)requiresaccurateshippingtimeandfullrangeofsophisticated3PLservicesfromP/Omanagement,tradeconsultingtospacebooking,warehousingandtransportationProvinceLogistics Demand Selected Provinces in Coastal ChinaGuangdongDemand Size5RemarksMajorexportsareprocessingoflowervalue-addedproductsnospecialrequirementforlogisticsquality;Roadtransportationisconvenient,oftencontainerizedinfactorytoreducecostlessneedforwarehousing/consolidationElectronicsindustryisboominginDongguan,whichhassomeleadingcompanieslikeHuaweipotentiallargeprofitablecustomersStrongWeakShanghai(Jiangsu, Zhejiang)5Shanghaiisthefastgrowingeconomic/financialcenterinChina,whichhassomemajorMNCssuchasSGM,Acer,Philips,etc.Theyarematuredcustomersoflogisticsservicesandlesspricesensitive.Ontheotherhand,togetthedealsfromthemusuallyneedstoinvolvehighlevelnegociationLargecompaniesinShanghaiandnearbyareasaremainlyJVsofautomobileandconsumerelectronicsindustry,whichhavehighproductvalueandlowerpricesensitivitySource:A.T.Kearneyfieldinterviewsandanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/23Demand SizeSichuan (Chengdu)Havethe3rdlargestdistributioncenterinChina,thelargestpopulation,andimportantheavyindustrybaseThelogisticsindustrytherehasalreadyattractedinterestofforeignlargeshipperslikeIkeaandinvestorsincludingHutchisonWhampoaLocatedinmountainareas,roadtransportinfrastructureisinconvenient,sohighlyrelyingonrailtransportChongqing2Agriculturalproducts,metalproductsandmotorcycles,whichtotallyaccountforover80%oftheexportvolume,arealllow-valueproducts,pricesensitiveandhaveflatgrowthUnderdevelopedinfrastructure,esp.roadandrailtransportationhavelimitedforeigninvestmentsinthisregion.Cargoesusuallytransportedbybarges,whichisthecheapestmodeProvinceIn inland China, the largest demand potential is in Sichuan and the Hubei/Yangtze river regionLogistics Demand Selected Provinces in Inland ChinaYunnan2DemandGrowthRemarksMostimportantexportindustryistobacco,whichhashighprofitmargin,highqualityrequirementforlogisticsservices,andnotverypricesensitiveExportsforwood,woodenmaterialsandfurniture,whichaccountedforover30%ofexportvolumebefore,arelargelyreducedduetonewlyimposedgovernmentsanctiononcuttingtreesHighLowStrongWeakSource:A.T.KearneyfieldinterviewsandanalysisHubei, Yangtze River Region3Exportsarelow-valueproductsincludingtobacco,cotton,chemicalsandsteelmaterialsManyimportsarematerialforJVs(e.g.CitreonandDongfengCummins),ofwhichdecisionsareusuallymadeoverseasMarketisveryfragmentedandshippersgenerallyhavesmallscale/volumeNowarehouses/pilingcenterswithmoderncontainerhandlingcapacityandadvancedITstructureareavailable,canbeapotentialdevelopmentarea38Point/FinalVersion/LogisticsIndustryOutlook-final/24Growth in the logistics services industry in China will mainly be driven by continued macro economic growth and increased propensity to outsource logisticsGrowth DriverImplicationTheChineseeconomyisexpectedtogrowatCAGR7%overthenextfiveyears.IncreasedinternationalanddomestictradewilldrivedemandforlogisticsservicesPublicpolicyandspendingsupportsimprovementsinChinaslogisticsinfrastructure,providingopportunitiesforfurtherexpansionoflogisticsserviceproviders.Capableforeignserviceprovidersarelimitedinbusinessscopebyregulation,andtheirfullentryafterWTOwilldrivetheindustrytowardinternationalbestpracticesThereisincreasinginterestamongChina-basedenterprisesinoutsourcingforlogisticsservices.OverseasbusinessesareextendingtheirsupplychainsdeeperintoChinaThefastgrowingmarketinonlineB2BtransactionsprovidesanadditionalmarketsegmentforlogisticsservicesFavorable Growth Outlook forthe China Logistics Services IndustryFavorable Macro Economic OutlookPublic Policy and SpendingIncreasing Interest in Outsourcing for Logistics NeedsGrowing IT and E-Business1234Source:A.T.KearneyAnalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/25The Chinese economy is expected to grow at CAGR 7% over the next five yearsSource:Chinainfobank,A.T.KearneyAnalysisProjection of Chinas GDP Growth and Structure (RMB, Bn)nContinuousgrowthinGDPindicatesarobustandfastgrowingmacroeconomy,providingopportunitiesforsophisticatedlogisticsserviceprovidersnTheeconomicstructurewillbecontinuouslyoptimizedandupgradedLogisticsisdirectlycorrelatedwiththemanufacturingindustry,thereforegrowthofsecondaryindustrieswillleadtothegrowthoflogisticsservicesImprovedservicesindustrieswillalsohaveapositiveimpactonthelogisticssectorImprovedsupportiveservicessuchaslegal,accounting,etc.ImprovedtelecommunicationcapabilitiesRemarksSecondary: 7%Tertiary: 9%CAGR (01-06)Total: 7%Primary: 3%13,3679,560Favorable Macro Economic Outlook18Point/FinalVersion/LogisticsIndustryOutlook-final/26Demand for logistics services comes from both international and domestic tradeSource:HongKongTradeDevelopmentCouncilResearch;ChinainfobankDemand for Logistics ServicesMore International TradeMore Domestic TradenInternational tradeInternationaltradehassustainedtheglobaleconomicfluctuationandkeptfastgrowinginthepast5yearsItisprojectedtogrowataCAGRof7.5%,withtotaltradevaluereachingUS$680Bnin2005nExports Expectedtorisebyanadditional2.4%peryearoverthefirstfiveyearsofWTOentryShareasworldexportsisprojectedtorisefromcurrent3.5%to7.3%in2005nImportsProjectedriseofUS$21.3BnafterWTOProjectedannualgrowthratewillbemarginallyfasterthanexportnDomestic TradeCAGRofretailsalesofconsumergoodsinthe“Ninth5Year”was11%PositiveoutlookduetocontinuouslygrowingpurchasingpowernDevelopment of chain storesSalesrevenueofchainstorecorporationshasexperiencedoubledigitrisefrom1997MultinationalchainstoreshavebeenaggressivelyimprovingtheirpresenceinChinamarketnInter-city tradeCurrentlymorethan50%oftheforeignindustrialandretailfirmsdistributedtheirproductsinmorethan50citiesInter-citytradewillbefrequentafterWTOFavorable Macro Economic Outlook18Point/FinalVersion/LogisticsIndustryOutlook-final/27The State Economic and Trade Commission has established a master plan for developing logistics services in ChinaState Economic and Trade Commission Logistics Industry Trade Plan30 Pilot CentersInter-regional NetworksSupply Chain SystemsSelectsuitableenterprisesinvariouskeycitiestoestablish30pilotlogisticsanddistributioncenters10 National EnterprisesAbout10specializedkeyenterpriseswithnationallogisticsanddistributionnetworkswillbedevelopedRealignassetstoforminter-regional,inter-sectorandinter-ownershiplogisticsanddistributionnetworksEffortswillbemadetoexplorethepossibilityofusing3PLanddistributionenterprisestobuildsupplychainsystems,andtobringfacilitiesandservicesoflogisticscompaniesclosertoadvancedinternationalstandardsPublic Policy and Spending28Point/FinalVersion/LogisticsIndustryOutlook-final/28A wide array of government supported logistics infrastructure development programs are under way across ChinaSource:ChinainfobankExamples of Government Initiatives to Improve Logistics InfrastructureAnumberofnationallogisticscentersareunderconstruction,withreasonablesize,standardizedoperation,andmodernfacilitiesCoastal Large Cities - Logistics CenterInland Areas - Road/RailwayModernthirdpartylogisticsanddistributionbaseItsmainbodywillbelinkedto7railwaysandhundredsofrailwaytransitpointsExpectedtoserveforthedispatchofover90%ofdailynecessitiesinthecityAlsoserveeasternChinaandthewholecountryShanghai Commercial Logistics CenterPublic Policy and Spending2Highwaydensitywillgrowtoabout1650km/10000sq.kminyear2005InvestRMB270BntoupgraderailwayinfrastructureNewrailways,electricrailways,highways,expresswaysareinphase:8Point/FinalVersion/LogisticsIndustryOutlook-final/29Interviews with SOEs and foreign invested enterprises in China indicate a relatively strong interest in outsourcing logistics servicesSource:A.T.KearneyfieldinterviewsandresearchnSOEsusuallyhaveownwarehousesandtruckingdivisions,therefore,theydemandlesswarehousing,transportationandotherrelatedvalue-addedservices.However,infaceofincreasedcompetition,SOEshaveagrowinginterestinoutsourcinglogisticsnForeigninvestedenterpriseshavethehighestrequirementforlogisticsservicesintermsofrangeandquality.ThesecompaniesareextendingtheirsupplychainsintoChina-replacingmiddlemenwhousedtogetChinaorigincargototheport.MNCswillbelookingforlogisticsservicescompaniesinChinatohelpthemfillthevoidnImport/exportcompanieshavetheleastdemandforlogisticsservicesproviders,becausemostofthesecompaniesalsoprovidetransportation,customsclearanceservices,etc.Remarks% of Respondents with Interest in Outsourcing Logistics Services (2001)Increasing Interest in Outsourcing for Logistics Needs38Point/FinalVersion/LogisticsIndustryOutlook-final/30China-based companies have a positive attitude towards purchasing advanced logistics services and quality, speed, and price are the most important purchasing criteriaNote:(1)SurveybytheChinaWarehouseAssociation(2000)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource: Chinainfobank,ChinaWarehouseAssociate,A.T.Kearneyfiledinterviewsandresearch7%22%26%29%44%52%64%75%Looking for distribution servicesPrefer transportation companiesUse general logistics agentsPrefer trunk line servicesLooking for new logistics agentsHire third party agentsHope that new logistics providers will provide comprehensive logistics servicesLooking for modern logistics companiesInterest in Logistics Services Survey Results (2000)Logistics Services Purchasing Criteria - China0.880.810.790.770.680.910.910.93NetworkDocumentationReputationInfo TrackingProfessionalismPriceService SpeedService QualityRelative ImportanceHighAvg. = 0.82Increasing Interest in Outsourcing for Logistics Needs3Low8Point/FinalVersion/LogisticsIndustryOutlook-final/31Online transactions provides an additional source of growth for logistics servicesSource:ResearchReportofChinaE-BusinessAssociationandNetworkEvaluationCenter,Apl.2001Growth of Online Transaction in China(US$, Bn)B to B(US$, Bn)B to C(US$, Bn) CAGR (00-04)CAGR (00-04)B2B: 53%B2B: 53%B2C: 167%B2C: 167%Growing IT and E-Business4nIndustry-PublicinformationplatformReducingcostandoverlapininvestment,informationsharenCustomers/shippersStandardbarcodingsystem,easierforoutsourcingBetterfacilitiestocommunicatewithserviceproviders,easiertomanageandsupervisenServiceproviders-IntranetCostreductionfromhigherefficiencyBetterservicequality,becauseofinternet/intranetenabledreal-timecargotracking,etc.Broaderservicerange,e.g.tradeconsultingCurrent Industry Initiatives8Point/FinalVersion/LogisticsIndustryOutlook-final/322. Service Demand8Point/FinalVersion/LogisticsIndustryOutlook-final/33Customers are increasingly demanding high value logistics service solutions, requiring global reach and advanced supply chain management capabilitiesService Demand - Global TrendsnTraditionally,costreductionhasbeenthemainreasonforcompaniestooutsourcelogisticsnToday,customersareincreasinglydemandingmoreadvancedservicesandend-to-endsolutionsn“Demand-Pull”logisticsrequiresthelogisticsserviceproviderstobeflexibleandtocontrolalargepartortheentiresupplychainnLeadinglogisticsserviceprovidersaredevelopinglogisticsone-stop-shops-fromrawmaterialsourcingtodeliveryoffinishedgoodsnCustomersareincreasinglyinterestedincontractswithbothfixedandvariablepricingschemes-basedonrisksharingnTheopportunityforrisk-sharingcontractsisconsideredtobegreatestintransportationandinventorymanagementService Demand - China TrendsnIntheChinamarket,logisticsdemandisstillcomposedofbasicservices,suchastransportationandwarehousingnGoingforward,demandforlogisticsservicesinChinawillmainlycomefromTransportation/Distribution,Warehousing/ConsolidationaswellasCustomsBrokerageandForwardingnThequalityoflogisticsservicesofferedinChinaarenotgoodasindicatedbypoorperformanceonon-timedelivery,cargolossanddocumentaccuracynHowever,satisfactionlevelsforlogisticsservicesinChinaarerelativelyhigh,possiblyindicatinglowexpectations8Point/FinalVersion/LogisticsIndustryOutlook-final/34Service Demand - Global Trends8Point/FinalVersion/LogisticsIndustryOutlook-final/35Traditionally, cost reduction has been the main reason for companies to outsource logistics1.Reduce and control operating costs2.Improvecompanyfocus3.Gainaccesstoworld-classcapabilities4.Freeinternalresourcesforotherpurposes5.Resourcesarenotavailableinternally6.Acceleratereengineeringbenefits7.Functiondifficulttomanage/outofcontrol8.Makecapitalfundsavailable9.Sharerisks10.Cashinfusion15%25%15%10%15%6%8%3%5%4%6%20%28%10%15%10%12%7%10%10%13%Estimated Cost SavingNote:(1)Useof53-footequipment(2)Consolidation,schedulingandmodeselectionSource: CSFBHard Savings (mainly transportation)DynamicconsolidationDedicatedoperationsModeconversionCubeutilization(1)CarrieroptimizationRatemanagementInbound(2)Soft Savings (mainly warehousing)ReverselogisticsLocationstudyInventoryDistributiondesignsystemAreaTop-ten Reasons Companies Outsource Logistics8Point/FinalVersion/LogisticsIndustryOutlook-final/36Today, customers are increasingly demanding more advanced services and end-to-end solutions, such as supply chain integration733333333475353536666667373808087LaborCostSavingsTransportationCostSavingsAccesstoSkillsFreedomtoFocusonCoreCompetenciesCapitalAssetFlexibilityBalanceSheetReliefProjectManagementandStartUpImprovedCustomerServiceInventoryCostReductionAccesstoInformationSystemsSystemsIntegrationCycleTimeReductionGlobal AccessSupply Chain Integration FacilitationSupply Chain Integration ImplementationFreedomFromRegulationOtherPast Service DemandCurrent Service Demand% Respondents3242637453899510010010010074849510010095% RespondentsExpected Future Service Demand% Respondents20339393100536666736666465373666660Source:A.T.Kearney1998LogisticsSurvey8Point/FinalVersion/LogisticsIndustryOutlook-final/37“Demand-Pull” logistics requires the logistics service providers to be flexible and to “control” a large part or the entire supply chainSuppliersManufacturingDemand indirectly drives manufacturing volume through forecastsWarehouseWholesale/Retail“Supply-push” Logistics ChainSuppliersB2BExchangeManufacturingDirectDelivery“Demand-pull” Logistics ChainManufacturing driven by actual demandTherateofsupplywassetbythemanufacturerinadvance,basedonexpecteddemandItwastheroleofthelogisticsproviderstoensureajust-in-timesupplyofcomponentsTherateofmanufactureisdeterminedonareal-timebasisbytherateofdemandWhilethismodelismoreefficient,itrequiresperfectintegrationofalllogisticsoperationswithinoneprocessSource:LehmanBrothers,A.T.KearneyAnalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/38Leading logistics service providers are developing logistics one-stop-shops - from raw material sourcing to delivery of finished goodsRawMaterialsSourcingProductionPlanningFactorySourcingManufacturingControlQualityAssuranceExportDocumentationShippingCustomerOrderPlacementReceiptofFinishedGoodsSource:A.T.KearneyFinancematerialsFinanceproductionArrangepaymentfortransportationFinancingPurchaserawmaterials:fabricandtrimSelectfactorieswiththerequiredskills,specialtyorcapacitySourcingCoordinateproductiontransportationConsolidateandshipgoodstocustomersPrepareimport/exportdocumentationProvideshipmenttrackingLogistics ServicesArrangeandschedulematerialsdeliveryCreateandmanageproductionschedulesEnsurequalityProvidetrackingSupply Chain ManagementFull Service ProvisioningKey Capabilities 8Point/FinalVersion/LogisticsIndustryOutlook-final/39Customers are increasingly interested in contracts with both fixed and variable pricing schemes - based on risk sharingNote:(1)17respondentsSource: A.T.Kearney19983PLsurveyType of Pricing Schemes in Logistics Contracts (1) - GlobalTrend in Pricing SchemesCost-PlusMixture of Fixed/ VariableOthersTransactionPercent ofRespondentsTransaction8Point/FinalVersion/LogisticsIndustryOutlook-final/40The opportunity for risk-sharing contracts is considered to be greatest in transportation and inventory managementMain Hurdles for Risk-sharing ContractsIdentifyingBaseline/BenchmarksEnforcement/Commitment/WillingnessonPartofCustomerSelectingMetricsandMeasuresConcernaboutOut-YearsScopeLimitorExpansionAgreeingonTargetsandWhenTheyAreMetSource:A.T.Kearney19983PLsurveyRisk-sharing OpportunityLargeOpportunityMediumOpportunitySmallOpportunityNoOpinion8Point/FinalVersion/LogisticsIndustryOutlook-final/41Service Demand - China Trends8Point/FinalVersion/LogisticsIndustryOutlook-final/42In the China market, logistics demand is still composed of basic services, such as transportation and warehousingNote:(1) SurveybytheChinaWarehouseAssociation(2000and2001)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2) Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource: Chinainfobank,ChinaWarehouseAssociateLogistics Services Outsourced by Manufacturers (2000)Logistics Services Outsourced by Distributors (2000)8Point/FinalVersion/LogisticsIndustryOutlook-final/43Going forward, demand for logistics services in China will mainly come from Transportation/Distribution, Warehousing/ConsolidationWarehousing/ConsolidationTransportation/DistributionPurchasing/Manufacturing133In-houseTruckcompaniesMORCOSCOChinaPostPortbureausHaier,TCLMaersk,APL,P&OIn-housePurchaseordermanagementVendorscreeningandmanagementTruckContainertowingRailBargeStorageInventorycontrolSorting/LabelingPackaging/UnpackingConsolidation/DeconsolidationPurchaseordermanagementandvendorscreeningaretheleastdemandedserviceswithlessthan5%intervieweesindicatinginterest.Manufacturersgenerallydontfeelcomfortableallowingoutsideserviceproviderstogetinvolvedinkeydecisionslikepurchasing,sourcing,etc.RailwayislargelyMORmonopoly,andsomelargecompanieslikeCOSCOandSinotranshaveunittrainswhichhavelowerpricesbetterservicelevelsTruckingmarket,includingcontainertowing,isveryfragmented.Currentsupplyexceedsdemand,resultinginpricecompetitionandthetrendofdecreasingpricesItmightbemorecosteffectivetohavelong-termrelationshipswith2to3truckingcompaniesthantohaveowntrucksTraditionally,largemanufacturershaveownwarehouses,thereforetheydontneedtooutsource.Butthequalityofthosewarehousesisusuallyoutdatedandvalue-addservicesarelimitedWarehouses/CYsatportsareownedandmanagedbyportbureausForlogisticsservicesproviders,lackofmodernwarehouses/distribution-centersisoneofthebottlenecksIncoastalareas,MaerskandP&OhaveprovidedwarehousingrelatednewvalueaddedservicesforMNCs,esp.footwearcompaniesInterest LevelService ProvidersService TypeRemarksSource:A.T.Kearneyfieldinterviewsandanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/44 as well as Customs Brokerage and ForwardingD-to-D542PortbureausFreightagentsProfessionalbrokeragehousesCOSCO,PenavicoSinotransMaerskMaerskP&OCOSCOCustomsclearanceanddutypaymentBOLandotherdocumentmanagementSpacebookingwithlinehaulcarrierCargotrackingTradeconsultingDoor-to-doorservicesInterest LevelService ProvidersService TypeCustoms BrokerageForwardingSource:A.T.KearneyfieldinterviewsandanalysisShippersusuallyoutsourcecustomsclearanceto3rdparty,orliketohavetheserviceprovidersconsulting/supportonthatOntopofthetraditionaldocumentservices,increasingdemandcomesformoreclient-centeredservice,suchasthedeliveryserviceofBoL,andwithbetterqualityEmergingrequirementformorevalueaddedservicessuchastradeconsultingoncontractterm,L/C(esp.forsmalltomiddlesizedlocalcompanies)anddestinationmarketinformationfeedback(esp.fordemandsensitiveproductssuchasapparel,furniture,etc.)CargotrackingisoneofthegapsbetweenChinesecompaniesandthosegloballeadingcompanieswithGPSDemandfordoor-to-doorservicesandex-works(EXW)termsisincreasing,inordertoreducedamagerateduringtransportation,guaranteequalityofcargo/deliveryservices,andimproveshippersperceptionamongcustomersTheserequirementsareusuallyfromcontractssignedoverseas,thereforesaleseffortsshouldcooperatewithgroupHQandoverseascompaniesRemarks8Point/FinalVersion/LogisticsIndustryOutlook-final/45The quality of logistics services offered in China are not good as indicated by poor performance on on-time delivery, cargo loss and document accuracyOn Time Delivery Ratio (90%)Cargo Loss Ratio(2%)Document Accuracy Ratio(2%)Note:(1)SurveybytheChinaWarehouseAssociation(2000and2001)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource: Chinainfobank,ChinaWarehouseAssociate8Point/FinalVersion/LogisticsIndustryOutlook-final/46However, satisfaction levels for logistics services in China are relatively high, possibly indicating low expectationsNote:(1)SurveybytheChinaWarehouseAssociation(2000)Attitudesandpreferencesfordistributionof450largeandmedium-sizedenterprises(2)Therespondingenterprisesdealinelectricalhomeappliances,electronics,foodstuffsandchemicalsfordailyuseSource: Chinainfobank,ChinaWarehouseAssociateSatisfaction of Logistics Services Indicated by Manufacturers (2000)Satisfaction of Logistics Services Indicated by Distributors (2000)8Point/FinalVersion/LogisticsIndustryOutlook-final/473. Competitive Environment8Point/FinalVersion/LogisticsIndustryOutlook-final/48Increasing demand for global reach and capabilities fuels consolidation as large logistics service providers are positioning themselves for successCompetitive Environment - GlobalnThelogisticsservicesindustryiscomposedofanumberofdifferenttypesofplayersnFourfactorsareshapingthecompetitiveenvironmentinlogisticsservicesanddrivestheacceleratingpaceofconsolidationintheindustry-Economicsofscale,demand-pulllogistics,newcapabilities&globalreach,and“one-stop-shops”nTheimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehighvalueendofthebusinessthatisemerginginlarge,complexandlong-termcontractsnThus,M&AactivityhassurgeddramaticallyinthelastcoupleofyearsnGoingforward,AsiaislikelytoexperienceincreasedM&Aactivity-especiallyasChinaenterstheWTOnContainershippingcompaniesareaggressivelydevelopinglogisticscapabilitiesandAPL,Maersk,Hapag-LloydandNYKlinehavebuiltseparatebusinessunitstofocusonthemarketforvalue-addedlogisticsservices:Casestudy-MaerskLogisticsstrategyCasestudy-APLLogisticsstrategynGlobalplayersarepositioningthemselvesforsuccess:Casestudy-UPSLogisticsCasestudy-FedExLogisticsCasestudy-C.H.RobinsonnAnewtypeofinternet-basedlogisticsserviceproviderhasrecentlyemergednInternet-basedlogisticsservicescompaniesareofferingamultitudeofvalue-addedservices,e.g.automatedtrackingandtracing8Point/FinalVersion/LogisticsIndustryOutlook-final/49Increasing demand for global reach and capabilities fuels consolidation as large logistics service providers are positioning themselves for success (contd)8Point/FinalVersion/LogisticsIndustryOutlook-final/50Competitive Environment - Global 8Point/FinalVersion/LogisticsIndustryOutlook-final/51The logistics services industry is composed of a number of different types of playersSupply Chain Mgmt.Sales Function - Freight AgglomerationAsset OperationAsset ProvisioningFreight ForwardersShipping LinesTerminal operatorsPort, Ship Container lessorLogistics Service ProvidersLogistics Services ProvisioningTypes of Service/ProviderSource:A.T.KearneyAbility to DifferentiateAsset BaseCoreExtensionRegular ActivitiesIntegrators8Point/FinalVersion/LogisticsIndustryOutlook-final/52Four factors are shaping the competitive environment in logistics services and driving the accelerating pace of consolidation in the industryScaleScale is the key to capture high-value market segmentsSource:LehmanBrothers,A.T.KearneyAnalysisCompetitive EnvironmentNew Capabilities & Global ReachIndustry-specific skills and geographic coverage are increasingly important capabilities“Demand-pull” logisticsThe move away from supply-push to demand-pull logistics increases the need for integrated logistics companies“One-Stop-Shops”Customers drive to focus on a limited number of core logistics service suppliers12348Point/FinalVersion/LogisticsIndustryOutlook-final/53Drivers - Scale and “Demand-Pull” logistics“Demand-Pull” LogisticsnThemovefromsupply-pushtodemand-pulllogisticsstrategiesincreasestheneedforintegratedlogisticscompaniesthatprovidecompletesupplychaincoverageandadvancedinformationsystemstolinkallcomponentsofthechainSource:LehmanBrothers,A.T.KearneyAnalysisScalenTheimportanceofscalehasbecomeevidentasonlylargeplayerscancapturethehigh-valuemarketsegmentthatisincreasinglylarge,complexandlong-temcontractbasednThesurgingM&Aactivityhasbeenanevidenceofleadingplayersareseekingscale128Point/FinalVersion/LogisticsIndustryOutlook-final/54Drivers - New Capabilities and “One-Stop-Shops”“One-Stop-Shops”nShipperseekingtoobtainasupplychainadvantagethroughthecloseintegrationofalllogisticsoperationsareincreasinglyawardingexclusivecontractstointegrated,multi-functionallogisticsserviceprovidersformajorsegmentsoftheirsupplychain(e.g.inboundautopartstoanassemblyplant)-theobjectiveistoreducecoststhroughoutthesupplychain,moveinventoryfasterandcontrolitbetter,andtoobtaintransparencyacrossallelementsonthesupplychainnSuchshippersaredeveloping“coresupplier”strategieswithalimitednumberofhand-pickedtransportationandlogisticsserviceproviderswhohavewontheconfidenceoftheshipperstobetruestrategicpartners,workingwiththeshippersonprogramstoachievefurthergainsinlogisticsefficiencynShippersarealsocoordinatingtheirsupplychainstrategieswithotherkeysuppliersofmaterialsandservices(andevenwithcompetitors)wheresignificantefficiencygainsmaybemadeSource:MerrillLynch,A.T.KearneyAnalysisNew Capabilities & Global ReachnIndustry-specificorgeographiccoverageallowlogisticscompaniestodevelopsuperiorbusinessefficienciesandsystemscapabilitiesnShipperslookingforasupplychainadvantageareincreasinglyfocusingontighteningtheinterfacebetweendifferentlogisticsstepstopreventthelossofsupply-chainefficienciesincaseswheredifferentoperatorsinteractpoorlyduetolackofcommunicationanddifferentcommercialprioritiesnThistrendisparticularlymarkedwhereshippersaimtoreduceinventorylevelsbymovingawayfromtraditionalsupply-chainmodelstowardsademand-pullmodelnLogisticsserviceprovidersaredevelopingthecapabilitiestomeettheseneedsthroughbothinternalinitiativesandM&AnSeveralmajorinternationallogisticsserviceprovidershaveacquiredoperationsinothercountriesinordertobuildaninternationalcapabilitytomeetcustomerrequirementsforglobalservicecoverage348Point/FinalVersion/LogisticsIndustryOutlook-final/55The importance of scale has become evident as only large players can capture the high value end of the business that is emerging in large, complex and long-term contractsSource:CompanywebsitesExamples of Logistics Outsourcing Contracts 20002001DateProvidingstorage,warehousemanagement,pickandpackandUKandEiredistributionservicesforBoehringerIngleheimsproductportfolioUS$20MnExelDirectBoehringerIngleheimManagingtheinboundtransportationformorethan1,500suppliersinto26GMPowertrainengine,transmissionandcomponentplants,primarilyinN.AmericaN/AFedExGeneralMotorsExelwilloperateSainsburysnewRegionalDistributionCentreatEmersonsGreen,BristolProvidinginternationaltransportationandlogisticsservicesManagingthemajorityofthemilitarysoutboundfreightshipmentsfrominstallationsinAlabama,FloridaandGeorgiaWarehousingserviceinMechanicsburg,PennsylvaniaAsupply-chainmanagementprogrambetweentheUnitedStatesandtheUnitedKingdomDeliveringonlinefulfillmentandphysicaldistributionservicesServicesN/AExelDirectSainsburysN/AEGLEagleGlobalLogisticsNokiaUS$33MnEGLEagleGlobalLogisticsMilitaryTrafficManagementCommandN/ADSCLogisticsNabiscoFoodGroupN/ADanzasAEIBodyShopInc.N/ADanzasAEIStudioDirectSize (US$ Mn)Logistics Service ProviderCompanyTransportingessentialconsignmentsbetweensixproductionplantsandresellers,dealers,wholesalersandconsumersthroughoutEuropeResponsiblefortime-specificdeliveriestoover4,000dealershipsfromfivecentrallocationsN/ATNTLogisticsMotorolaN/ATNTLogisticsGeneralMotorsPharmaceuticalAutoGroceryretailTelecomGovernmentFoodHealthcareE-commerceIndustryTelecomAutoJun.2001Since1995May.2001Jun.2000Apr.2001Jan.2001Oct.2000Mar.2001Oct.2000Oct.20008Point/FinalVersion/LogisticsIndustryOutlook-final/56Source:CompanywebsitesWarehousingmanagement,distribution,inventorydeploymentofsuppliesandpartsandtransportationforthedeliveryoffinishedproductstomarketN/ARyderSystemInc.OfficeEquipmentXeroxCorporationApr.2000Manageandoperatetruckload,rail,dedicatedfleetandsubstituteserviceoperationsfor31Wal-MartCenterpointdistributioncentersnationwideUS$100MnannuallyJ.B.HuntRetailWal-MartStoresApr.2000ImplementatransportationmanagementprogramforitsElectronicSensorsandSystemsSector(ES3)andIntegratedSystemsSector(ISS)N/ARyderSystemInc.ElectronicsNorthropGrummanCorporationFeb.2001Manageinbound,outboundandthird-partyshipmentsdomesticallyandinternationallythroughoutNorthAmericaandEuropeN/ARyderSystemInc.AutoArvinMeritorMay.2001ManageSlimoFastssoledistributioncenterintheU.S.ManageallaspectsofHomeLifessupplychain-includingsupplychaindesign,informationsystemsdesignandintegration,transportation,warehousing,homedeliveryandreverselogisticsManageandoperateprivatefleetoperationsatelevenseparateNorthAmericanlocationsServicesN/AMenloLogisticsFoodSlimoFastFoodsFeb.2001N/AMenloLogisticsHomefurnishingHomelifeAug.2000N/AJ.B.HuntPlasticsM.A.HannaCompanyFeb.2000Logistics Service ProviderIndustryCompanyDateSize (US$ Mn)ManagingglobalsupplychainUS$150MnUPSLogisticsSemiconductorNationalSemiconductorAug.2000StreamlineSEMCOsinternationaltransportationandglobalsupplychainN/AUPSLogisticsElectronicsSamsungElectro-MechanicsCo.Nov.2000The importance of scale has become evident as only large players can capture the high value end of the business that is emerging in large, complex and long-term contracts (contd)Examples of Logistics Outsourcing Contracts 2000 20018Point/FinalVersion/LogisticsIndustryOutlook-final/57Thus, M&A activities surged in the last couple of yearsGoing forward, Asia is likely to experience increased M&A activity, especially as China enters the WTOSource:MerrillLynch,A.T.Kearneyanalysis227ProvidingtruckbrokerandintermodalmarketingservicesMarkVIIOceanGroupplcJul27,991,140LeadingU.S.freightforwarderAirExpressInc.DeutschePost/DanzasNov04,99136InformationtechnologyBased3rdPartyLogisticsProviderAmericanBackhaulers,IncC.H.RobinsonWorldwide,IncNov18,99N.A.AirfreightforwarderinChileCargoLimitadaEagleUSAAirfreight,IncDec16,996503PLwithspecialtyinAutomotiveCustomizedTransport,IncTNTPostGroupJul03,00934TruckingservicesproviderAmericanFreightwaysCorpFedExCorpNov13,00600OneoftheworldslargestfreightforwardingcompaniesSembcorpLogisticsKuehne&NagelNov28,00382TruckloadmotorcarrierinNorthAmericaSwiftTransportationM.S.CarriersDec12,00450Leadingfreightforwarding,custombrokerageandlogisticscompanyFritzUPSJan10,01Equity Purchasing Price (US$ Mn)Target/AcquirerDate AnnouncedBusiness of Target8Point/FinalVersion/LogisticsIndustryOutlook-final/58Container shipping companies are aggressively developing logistics capabilities and .321134353555Consolidation111111211535Sourcing121111214545Forecasting inventory121124411455Supply-Chain Consulting323333433454Intermodal333334454555Document Handling1113K-Line2234COSCO1113CP Ships1112Evergreen3332Yang Ming5333OOCL3454MOL5553Hapag-Lloyd4224P&O Nedlloyd (1)5554NYK5555NOL/APL5554MaerskTrackingDistributionWarehousingGlobal PresenceNote:(1)DoesnotincludelogisticsservicesofP&OGroupthatarenotwellcoordinatedorintegratedwithP&ONedlloydSource:A.T.KearneyShippingCompanyLogisticsCapabilities8Point/FinalVersion/LogisticsIndustryOutlook-final/59 APL, Maersk, Hapag-Lloyd and NYK Line have built separate business units to focus on the market for value-added logistics servicesWorldwide Revenues from Carriers Logistics Business Units(US$, Mn)1999200019992000199920001999200018%-10%157%29%(1)APLHapag-LloydMaersk-SealandNYKNote: (1)MaerskLogisticsisnewintegratedcompanyofSeaLandLogisticsandMercantile,therevenuein1999isonlyMercantile.Source:Hapag-LloydAnnualReports;NYKwebsite;CSFBreportonNOL/APL;A.T.KearneyAnalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/60Case Study - Maersk Logistics Strategy is providing comprehensive “all-time, all-space, and all-mode” solutions to attract customersVisionStrategic InitiativesCore CompetenciesBusinessMaersk Logistics“Bythoroughlyplanningandexecutingsuitablecostreducinglogisticssolutions,wesecureourclientsanimportantcompetitiveedge.”Logisticsbusinesstotallyindependentfromshippinglines,mainbusinessesnotfromshippinglinesAggressivelybuildingairfreightunittobecomeall-modeone-stopproviderforitscustomersIntroducedadvancedITsystemssuchasINTRA,M*Power,toenablesophisticatedcustomertrackingofordersandgoodsStrongreputationinshippingleveragedtologisticsbusiness,ensuringcustomersreliabilityinservicequalityandtimingMajorservicesdividedintosupplychainmanagement,airfreight,warehousing,consolidation,documentation,bar-codingandEDIMaerskLogisticshavingUS$10Mninrevenuein2000,12%ofthatofMaerskGroupMainclientsincludingTarget,Walmart,Footstar,allwithlong-termcontractsGlobalpresenceandlocalknowledgewithabout200salesofficesinover70countriesaroundtheworld,enablingMaerskto“pinpointthewhereaboutsandstatusofimportantcargoenroute”withlocalrepresentativesAdvancedsystemofwarehouses/distributioncenters,195worldwideand72inAsiaSource:A.T.Kearney8Point/FinalVersion/LogisticsIndustryOutlook-final/61Case Study - APL Logistics Strategy is focusing on IT capability and selected industries with aggressive development of logistics operating terminals worldwideSource:A.T.KearneyVisionStrategic InitiativesCore CompetenciesBusiness APL LogisticsAPLLogisticsisdedicatedtoprovidingcomplexinformationsolutionsbyenhancingsupply-chainvisibilityandintroducingnewproductsandservicesthathelpcustomersruntheirbusinessesmoreefficiently.Focusingoncustomerintimacy,aggressiveapplicationofInternettechnology,absolutecommitmenttoinvestmentandserviceexpansionsFocusingonretail,automotiveandindustrialclientsaroundtheworldRemainedindependentwithlessthan50%ofoutsourcedseatransportationneedscarriedviaAPLvesselsAcquiredGATXLogisticstoplugthebiggapinthewarehousemanagementanddistributioncapabilitiesinNorthAmericaManagedtoleverageoncustomerrelationshipbuiltthroughfreightforwardingExperiencedmanagementwithquick,innovativeandaggressivemarketingstrategyandkeenvisionintofuturecustomerneedsServicesdividedinto4groups:consolidation,intermodalmanagement,contractlogisticsconsultingandautomotivelogisticsFY2000revenueUS$479Mn,roughly10%oftotalAPLrevenueMainclientsincludingSears,ColgatePalmolive,Kellogg,Rolls&Royce,HoneywellGlobalpresencewithofficesin55countriesaroundtheworldStrongwarehousinganddistributioncapacitywith115warehousesinNorthAmerica,LatinAmerica,Europe,SoutheastAsiaandChina8Point/FinalVersion/LogisticsIndustryOutlook-final/62Case Study - UPS Logistics Strategy is leveraging a well recognized parcel services and strong financial position to develop comprehensive global supply chain solutionsUPSLogisticsGroupseekstobeaproviderof“comprehensiveglobalsupplychainsolutions”Offeringafullportfoliooflogisticsservicesonaglobalorregionallevel,includinglogisticsdesignandreengineering,managementexpertise,andleadingedgeinformationsystemsRecentlyacquiredFritz.,aglobalfreightforwarding,customsbrokerageandlogisticscompany,LivingstonandFirstInternationalBancorp,aleadingprovideroftradefinancingDevelopedabilitythroughUPSCapitaltoenablebusinessestolinktheircashflowsmanagementStrongglobalnetwork,reachingalmostallmajorcities,esp.withinUSBrandimageofbeingfastandreliableestablishedfromparcelservicesUPSFY2000totalrevenuereachedUS$29.7Bn,logisticsrevenueaccountedforlessthan5%ofitstotalrevenueContinuouslyhelpingGMNorthAmericatomanageitsinboundtransportationfrommorethan1,500suppliersinto26GMplants(HonoredasSupplieroftheYear)StrongfinancialpositionwithlargerevenueandrecentstockofferingsVisionStrategic InitiativesCore CompetenciesBusiness UPS Logistics Source:A.T.Kearney8Point/FinalVersion/LogisticsIndustryOutlook-final/63Case Study - FedEx Logistics Strategy is building an integrated transportation, information and logistics solution on strong global network, control of air freight and key customer relationshipsSource:A.T.KearneyVisionStrategic InitiativesCore CompetenciesBusinessFedEx Logistics FedExseekstoprovide“integratedtransportation,information,andlogisticssolutionsthroughapowerfulfamilyofcompaniesthatoperateindependentlyyetcompetecollectively”CombiningAmericanFreightwayswithVikingFreighttocreateFedExFreight,expandingitsscopeofLTLservicesinNorthAmericaCreatingFedExCorporateServicestoprovidecustomerswithasinglepointofaccesstothefullrangeofservicesCreatingFedExTradeNetworkstooffercustomsbrokerageandtradefacilitationsolutionsforglobalcustomersAcquiredTowerGroupInternational,aleadingcustomsbrokerandWorldTariff,apremiersourceofcustomsdutyandtaxinformationKeycustomerrelationshipandcontrolofairlineresourcesStrongglobalnetwork,reachingalmostallmajorcities,esp.withinUSBrandimageestablishedfromparcelservicesofbeingfastandreliableFortheyearendingMay31,2000,FedEXFreightrevenuereachedUS$835Mn,whichisabout4%ofFedEXstotalrevenue.However,FedEXFreightrevenueisprojectedtogrow150%in2002ContractedwithFordinNorthAmericatoreduceitsdeliverytimefromplantstodealersandcustomersAgreementwithCompaqNorthAmericatomanageitsservicepartsnetworkThree-yearagreementwithSprinttooperateandmanageitsNationalReturnsProcessingCenter(USA)8Point/FinalVersion/LogisticsIndustryOutlook-final/64Case Study - C.H. Robinson Logistics Strategy is seeking ways to reposition itself and its 14,000 motor-carrier fleetSource:A.T.KearneyVisionStrategic InitiativesCore CompetenciesBusinessC.H. RobinsonRepositionasfullservicelogisticsproviderConvertingfromtraditionalcarrierstomodernfullservicelogisticsproviderServicesincludesourcing,logisticsandinformationsystemsAddingmorecapabilitiestomeetneedsincludingintruck,air,ocean,intermodal,customsclearanceContracttruckingwith14,000motorcarriersoncontractExtensivecustomerbasewithover8,600customersestablishedincommoditytradingKnowledgeincommoditytradingFullyintegratedintofoodsupplychainExtended“highend”experienceacrossindustriesandservicesUS$1.79Bninrevenueswith1,900employeesRapidtoplinegrowthofover15%Officesin38statesand10foreigncountries8Point/FinalVersion/LogisticsIndustryOutlook-final/65A new type of internet-based logistics service provider has recently emergedTransplace.comTMSource:A.T.KearneyInternet-Based Market PlacesProvidingshipperswithlogisticsworkflowmanagementtoolssuchasordertracking,payment,billing,etc.CompanyStrategic FocusRoleExampleWeb-Based Logistics Management SolutionsSupply-Chain Integration SolutionsProvidingthearchitectureandintegrationengineswhichenableinter-enterpriseintegrationandempowermarketplacesProvidinginternet-basedtransportationexchange/auctionservicesResultClear failure as a strategy - carrierstypically refused tocooperate in their own disintermediation. Virtually all exchanges have either closed down or moved to another strategyOutcome remains unclear - question remains of whether companies can achieve enough critical mass in customer support to be viableOutcome remains unclear - critical mass also an issue in the face of challenges from SAP, Oracle, etc.8Point/FinalVersion/LogisticsIndustryOutlook-final/66Internet-based logistics services companies are offering a multitude of value-added services, e.g. automated tracking and tracingSource:Surveytomorethan70e-logisticscompaniesmadebyCSFBExisting/Planned Logistics Services by E-Logistics CompaniesActasathird-partytrackingandtracingagentbasedonthedataaggregatedfromvarioustransportationprovidersAforumforwhichthepurchaseofindustry-relatedgoodscouldbenegotiatedClassifythelegalitiesandcostbehindthemovementofproductsbetweencountriesaroundtheworldAforumforwhichthetransportationcomponentoflogisticscanbenegotiatedamongvariouspartiesAB2Cserviceofferedtomanufacturersandretailersinwhiche-logisticscompanyprovidestargetedmarketingservicesOptimizeafleetofassetsgiventheiracceleratedvisibilityintothedemandsideofthesupplychainProvidebasetariffratesforgivenmovementsanddifferentservicecriteriaAstheauction/exchangefeaturegainsmarketpenetrationwithshippersandcarriers,ane-logisticscompanywillbeabletodesignatefreightmovementstocarriersAstrackingandtracingtechnologydevelops,e-logisticscompanieswillhavethecapabilitytoproactivelywarntheircustomersofcertainpotentialservicefailuresHandletheflowoffundsbetweeneachpartyThestorageofsupplychaindatarelatedtoindividualcarrierperformanceandbroaderindustry-widemetricsUtilizetheflowofinformationthatpassesthroughtheirsystemstoautomatethedocumentationprocessPhysicalwarehousinganddistributionofproductspurchasedfromanonlineretailerBrief descriptionDemand LevelAutomated tracking and tracingPurchasing portalInternational landed costsFreight exchange/auctione-MarketingLane optimizationIndividual lane price quotesAutomated bookingService Failure NotificationAutomated billingData miningDocumentatione-FulfillmentService8Point/FinalVersion/LogisticsIndustryOutlook-final/67Competitive Environment - China8Point/FinalVersion/LogisticsIndustryOutlook-final/68In China, the transportation and forwarding sectors are dominated by domestic, mainly state-owned, companiesRoad & Sea Freight TransportationTherearesignificantpresencesofSOEsSinotrans&COSCO Air-freightMarketiscontrolledbyfirmssetupbyCivilAviationAdministrationofChina,butCOSCOenteredthemarketin1995 Inland ForwardingHandledbydomesticfreightforwarderswhoareusuallysub-contractedbytheinternationalfreightforwarders RailwaysRailfreighttransportationisgovernedbytheMinistryofRailway(MoR).COSCOworkswithMoRoccasionallyonco-operationbasis TruckingMosttruckingcompaniesinvolvedininlandtransportationaredomestic.FreighttransportbetweenHKandChinaareeitherChinesestate-ownedorSino-HKJVs Customs BrokeragesAspartofamovetorestructuretheindustry,theCustomsGeneralAdministrationstoppedapprovingcustomsbrokerageslicensein1998Domestic CompanyDominationSource:A.T.KearneyAnalysisStopped approving customs brokerage license, not only to foreign firms 8Point/FinalVersion/LogisticsIndustryOutlook-final/69Six types of service providers are competing transportation companies, national postal operator, manufacturing enterprises, domestic logistics companies, and foreign logistics companies and emerging e-commerce providersTypeTraditional Transportation CompaniesNational Postal OperatorManufacturing EnterprisesForeign Logistics CompaniesDomestic Logistics CompaniesStrategic AdvantagesOwninglogisticsresources,suchaswarehousesandvehiclesEstablishedcountrywidedistributionnetworkReadyaccesstobusiness-internalGlobalnetworkcoverageandscaleeconomyRecognizedbrandname,broaderserviceofferingandbetterservicequalityStrongresourceintegrationcapabilitiesFinancialsupportforlongterminvestmentLessbusinessknow-howoflocalmarketLackofinlandnetworkandresourceaccessibilitiesLessrelationshipswithlocalcustomersCertainrestrictionsfromregulationsCustomerbasefromlong-termtransportcustomersBetterresourceaccessibilityduetostrongrelationshipwithportbureau,customs,andgovernmentbureausBroadnetworkalloverChina,withunitrains,warehousesandvehiclesPrivilegedpositionasgovernmentplayerAlreadyestablishcooperationwithhighprofileclientslikeDell,IBM,HP,Haire,etc.StrongabilityinintegratingresourcesGoodinternalmanagementandwillingnesstoinvestinhumanresourceandITsystemExamplesCOSCOSinotransChinaPostHaier;TCLMaerskLogistics;APLLogisticsPGLSource:A.T.KearneyAnalysisStrategic DisadvantagesInsufficientunderstandingandlimitedserviceofferingLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformLackofoverseasnetworkLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformRelativelypoorinternalmanagementCanhardlyachieveeconomiesofscaleMoveawayfromcorebusiness/competenceLowerservicequalityduetolackofexperiencedlogisticsexpertsandITplatformLackofstronggovernment/regulationsupportLackofownlogisticsresources/facilitiesCanhardlyachieveeconomyofscaleE-commerce ProvidersOnlineserviceprovisionbackedbyrichofflineresourcesofthememberallianceThebestapproachtoreducetheinformationasymmetryandtospeeduptheinformationexchangeYettoidentifythebestpositioninginChinalogisticlandscapeYettoenhancethemanagementandITcapabilitytotrulyaddvaluethroughenablingintegratede-logisticsservices56NET.com8Point/FinalVersion/LogisticsIndustryOutlook-final/70Currently, foreign companies have limited presence outside Chinas Free Trade Zones. This is largely due to current restrictions on foreign participationThere are 444 Sino-foreign JVs in the form of headquarters, branches and subsidiaries. However, many of them are in the Free Trade ZonesPacificEastAsiaCargoAirlineshasenteredatie-upwitharegionalairlineDHL-SinotransInternationalAirCourierLtdoperatesinbigcitiesEvergreen,Maersk,OOCLAfewcustomsbrokeragehouseshavesetupelectronicsystemswithCustomsGeneralAdministrationandbanksintheFreeTradeZonesForeignJVhassetupwarehousingcapacitiesinvariousFTZAPLisengagedinAmericanConsolidationservicesInchcape,throughaJVwithCOSCO,operatesafleetofcontainertrucksservingkeyportsandindustrialcitiesFritzinvestedinalogisticscentersatYantianFTZ,integratingtheconsolidation,warehousingandtruckingfunctionsFederalExpressiscurrentlytheonlydedicatedUScargocarrierflyingtoChinaOOCLisengagedincargosystemsExample of foreign participation4CourierServices5Airline3ShippingLine5CustomsBrokerage2(EncouragedinFTZ)Warehousing4Consolidation4DomesticTrucking2(EncouragedinFTZ)LogisticsCenter4AirfreightForwarder4InternationalFreightForwarderRestrictions on Foreign ParticipationSector=low=highSource:A.T.KearneyAnalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/71The logistics business of major global service providers is expanding aggressively in China and will represent a significant threat to domestic playersnHasbeeninChinasince1995,offersawiderangeoflogisticsservicesthroughcentersin13locations,nOpeneditsfirstnationaldistributioncenterinShanghai,asanimportantfirststepinMaersksfullycontrolledpan-ChinadistributionnetworknAPLLogisticsisexpandingonitsstrongAsianbase(e.g.,10logisticscentersinChina)throughmajoracquisitionsoflogisticscompaniesinAmericaandEuropenAPLLogisticswillfocusonChinaandIndia,wherethecompanyismovingtoretailbusinessandlocaldistributionnOOCLoperates4majorlogisticscentersinChinaandisseekingtoleverageCargoSmarttechnologynStartedChinabusinessin1988,firstJVwithSinotransin1996nPlanningtodoubleitsofficesinChinato40inyear2001andisnowoperating6flightstoChinathisyearnPlantoexpanditsserviceareainChinafromabout200citiescurrentlyto300citiesinthenext5years,plantoopenJVsinShanghaiandShenzhenthisyearnChinabusinessgrewover30%inyear2000MaerskMaerskAPLAPLOOCLOOCLUPSUPSFedexFedexSource:JoCOnline,A.T.KearneyAnalysisCompanyChina Operations8Point/FinalVersion/LogisticsIndustryOutlook-final/72Case Study - Sinotrans is aspiring to become a national logistics leader by leveraging its established customer base and national reachCurrent StatusFoundedin1950Nationalcoveragewith13businessunits,497rep.offices/branchesand238JVsInternationalaccesswith12overseasrep.officesand29JVs/branches.Longtermrelationshipswithmorethan400freightforwarders,shippingagentsandcarriersinmorethan150countries64,000employees,3.32MSq.Mwarehouses,2.38MSq.Mfreightyard,3000trucks,15proprietaryterminals,77unittrainsand2MDWTshippingcapacityNationalITsystemwithglobalcargotrackingcapabilityEstablishedJVwithleadingexpressparcelserviceproviderssuchasDHL,UPS,TNTandOCSinmorethan20citiesinChinaMajor InitiativesEstablishedlogisticsdevelopmentdivisioninmid-2000withinitialfocusondevelopinglargeaccounts:Multinationals:InventorymanagementanddistributioninChina.RecentaccountsincludePhilipsEngineeringprojects:Internationalmultimodaltransfer.RecentaccountsincludetwoleadinghydropowerplantsStrengtheningITsupportingfunctionCurrentlypartneringwithleadingITvendors,suchasCARealigningsales,marketing,operationandfinancialprocessesinregionalbranchesTobecomeanationalleaderinprovidingfull-rangeintegratedlogisticssolutionsbyleveragingitsextensivenationalnetworksandcustomerbaseObjectiveSinotrans - Competitive Strategy8Point/FinalVersion/LogisticsIndustryOutlook-final/73Case Study - China Post is seeking to enter the logistics market by leveraging its brand and extensive networkCurrent StatusAnunprofitablenationalpostmonopolystrugglingwithdecliningtraditionalbusinessandincreasedcompetitioninhighgrowthbusiness236regionaldispatchbureauswhichcanbecomeregionaldistributioncenters,57,000branches(15,000ofthemarenetworked),41,000vehicles,593trainwagons,3proprietaryaircraftAnationalfinancialtransactionnetwork(“GreenCardNet”)connecting975citiesin30provincesAnationalcallcenterservicecalled”185”andanemerginge-commerceplatformcalled”183”Major InitiativesPositioninglogisticsasamajorbusinesslineforgrowthbyleveragingcurrentnationalcoverageandbrandImprovingitsnationalITbackboneof“GreenCardNet”Branchesinmoredevelopedareaspositionedaslogisticsintegrators:GuangdongPostispartneringwithLegendone-logisticsGuangdongPosthasacquiredlargeaccountssuchasHaier,PanasonicandP&GRecentlyaddedthreenewdomesticairservicerouteswhilefacinganincreasingpresenceofUPSandFedExEstablishedstrategicalliancewithChinaSouthernAirlinesfordoor-to-doorservicesNegotiatingwithbanksonpossibleoverseaslistingwithlogisticsasonemajorbusinesslineTomakelogisticsoneofChinaPostskeygrowthareasandatoolforturnaroundObjectiveChina Post - Competitive StrategySource:Companywebsite,ChinaInfoBank,QinghaiSecuritiesNews,CAACJournal8Point/FinalVersion/LogisticsIndustryOutlook-final/74Case Study - Maersk Logistics is investing heavily in China and has established a relatively large presenceCurrent StatusOfficesin14citiesincoastalareas,centralChina(Wuhan&Chengdu)andnorth-eastChina(Shenyang)Warehouseaccessin11citiesinChinaWorkingwithagenciestocoverareasacrossChinaFirstEuropeanlogisticscompanygrantedincorporation(aswhollyownedforeignenterprise)inChinaandobtainedoperatinglicensein1998Major InitiativesInvestingheavilyinPRandgovernmentrelationshipsbyadvocatingChinatraderelations,sponsoringBeijingOlympicbidandcharitiesetc.Launchingwiderangeofservices,includingIn&outboundsupplychainmanagementExportandimportserviceDistributionWarehousingContractlogisticsForwardingandgroupageAirfreightOfferingspecialservicesincludingQ.I.CBar-coding&labelingGOHcarton&paperpalletShrink-wrapping&slip-sheetingContinuetoexpandlogisticsservicesofferingthroughoutcoastalandinteriorofChinaMeetandsurpasstheclientsmostcomplexandchallengingrequirementsObjectiveMaersk Logistics - Competitive StrategySource:Variouscompanywebsite,COSCO,A.T.Kearneyfieldsurvey8Point/FinalVersion/LogisticsIndustryOutlook-final/75Case Study - PG Logistics, a pure domestic logistic integrator, has invested heavily in IT capabilities and provides a range of SCM servicesCurrent StatusFoundedin1994toserveP&GinChinaAprofessionallogisticsintegratorwithheadquarterinGuangzhouand45branches/officesnationwideRevenuein2001isexpectedtobeUS$30Mnwithabove500employeesAwebbasedlogisticsITplatformconnectingallofficesnationwideMorethan50accountscurrently,mostofwhicharemultinationals,e.g.Philips,ElectroluxandBayerMajor InitiativesProvidingarangeofservicesaimingatsupplychainintegrationLogisticsplanningLogisticsmanagement-transportation,warehousing,consolidation/de-consolidationandpackagingetc.Informationmanagement-ITplanning,supportandmanagementHeavilyinvestinginITcapabilitiesIntegratingownprocesswithcustomersprocessesRecentlyinvestingindistributioncenterinSuzhou(50KSq.Mwarehouse)BecomealeadinglogisticsintegratorwithlightassetbaseObjectivePG-Logistics - Competitive StrategySource:Companywebsites,ChinaInfoBank8Point/FinalVersion/LogisticsIndustryOutlook-final/76Case Study - Haier, a leading domestic consumer goods manufacturer, is leveraging its extensive network and capabilities to grow in logisticsCurrent StatusTheNo.1domesticelectricalapplianceproducerinChina,foundedin1984Morethan38,000distributionbranchesin160countriesCurrentlyhas42distributioncentersserving1550specialtystoresand9000salesoutletsinChinaMajor InitiativesStartedlogisticsprocessreengineeringin1999,aimingatPurchasefororderGlobalsupplychainstreamliningJITAnewsystemenablingincreasedservicelevels:100%onlinebiddingandpurchasingReducedpurchasingleadtimesfrom10daysto3daysSuppliersreducedfrom2,336to9788-hourdeliveryinmajorcities,24-hourregionaldeliveryand4-daynationaldeliveryRecentlyinauguratedastate-of-the-artdistributioncenterZeroinventoryZeroworkingcapitalShortestorder-deliverycycletimeMakinglogisticscapabilityacorecompetenceObjectiveHaier - Competitive StrategySource:Companywebsites,ChinaInfoBank8Point/FinalVersion/LogisticsIndustryOutlook-final/77Case Study - Domestic Chinese logistics e-commerce companies, such as 56net.com, are emerging as logistics information platforms Current StatusFirstlogisticswebsiteinChina,foundedinMayof2000by25Chinalogisticscompaniesasacommonlogisticse-commerceplatformBack-upbyextensivephysicallogisticsnetworksofChinaLogisticsEnterpriseAllianceLeveragingtheproprietaryinformationsourcesnationwideMajor InitiativesProvidingreal-timeinformationexchangeofshipperdemand,shippingcapacityandwarehousingcapacityTargetingtoimproveparticipantsshippingandwarehousingcapacityutilizationby15%byreducinginformationasymmetryandspeedingupinformationexchangeExpandingparticipants3PLcapabilitybyproviding:OnlineconsignmentOnlineprocessvisibilitythroughadvancedtechnology,suchasGPSCustomizedLANservicestothemembersTobecomethemostinfluentialandmostcomprehensivelogisticsinformationplatforminChinaObjectiveSource:Companywebsite,ChinaInfoBank8Point/FinalVersion/LogisticsIndustryOutlook-final/784. Regulatory Environment8Point/FinalVersion/LogisticsIndustryOutlook-final/79Chinas entry into WTO is expected to have two main implications - (1) the logistics market will grow rapidly, and (2) competitive intensity will dramatically increaseImplication of WTO EntryDetails1. WTO will trigger rapid growth of logistics services2. WTO will increase competitive intensityWTOreducestradebarriers.ChinesecompanieswillaccessoverseasmarketmucheasilyandMNCscandeveloptheChinamarketPossibledevaluationofRMBwillencouragemoreexportsandmoreforeigndirectinvestments,bothofwhichwillsignificantlyincreasetradevolumeWTOwillreducebarriersforinternationallogisticsproviderstodirectlyentertheChinamarket.Maersk,P&O,OOCLhavestartedtoaggressivelybuildrelationshipswithlocalshippersAsshippingagenciesaredoingalargeportionoftheirbusinesswithinternationalshippingcompanies,directlocalrelationshipbetweentheinternationalplayersandshipperswillsignificantlyreducetheneedforindependentshippingagenciesinfixedcontainerliners.Inaddition,currentlythepriceforshippingagencyrelatedservicesisfixedbythegovernmentWTOwillhaverelativelylessimpactonthecargoforwardingbusinessofcurrentplayers.LocalplayersstillhaveadvantagesinrelationshipswithshippersandlocalknowledgeSource:A.T.KearneyAnalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/80As China enters WTO, the competitive environment will change through opening of several market segmentsType of Price Control1. Providing officially deifined freight forwarding services2. Operate own terminals3. Operate own warehousePort areaOutside port4. Operate own trucksPort areaOutside port5. Operate own door-to-door B/LPort citiesInland prvovincesMajor Activities by Foreign Freight Forwarders1.Minorityshareallowed2.MinimuminvestmentofUS$1Mn3.Geographiclimitation4.FewJVsareallowedfordomesticfreightforwarding1.Cantakemajorityshareindevelopmentofproprietaryterminal2.Cantakeminoriyshareincommonports3.NoactualcaseexistinChina1.Portarea-Nolegalframeworkexists.Subjecttonegotiationwithport2.Outsideport-JVCY/CFSexist3.Freignownershipingeneralwarehouseisforbidden1.Portarea-Nolegalframeworkexists.Subjecttonegotiationwithport2.Outsideport-Nolegalframeworkexists.SubjecttoMOCapprovalcasebycase.JVexistsThisservicefallsintotheNVOCCcategory.NVOCCisnotanofficiallydefinedbusinessinChinayet.AregulationtorectifyitslegalstatusandrelevanttermshasbeendraftedbyMOCandisunderreview.DetailsisnotavailableyetMarketpriceMOCstipulatedprice,withflexibilityMarketpriceMarketprice1yearafterWTOentry-Majorityshare4YearsafterWTOentry-whollyowned,norestrictionondomesticfreightforwardingThispieceistreatedasMFNexceptionduringWTOnegotiation.ItwillbesubjecttobilateralnegotiationscasebycaseUponWTOentry-minorityownership1yearafterentry-majorityonership3yearsafterWTO-whollyownedUponWTOentry-minorityownership1yearafterentry-majorityonership3yearsafterWTO-whollyownedNowMarket Opening StatusType of Price ControlMarketpriceFurtherlooseningupMarketpriceMarketpriceFuturePotential Market OpeningSource:InterviewwithMOC;A.T.Kearney,WTOresearch8Point/FinalVersion/LogisticsIndustryOutlook-final/815. Information Technology8Point/FinalVersion/LogisticsIndustryOutlook-final/82Strong IT capabilities is becoming a core capability of logistics services providers and is critical to building a logistics services businessnAsthesupplychainbecomesincreasinglydigitised,ITbasedservicesarebecomingacorecompetencyforanymajorlogisticsservicesprovidernLeadinglogisticsplayershavededicatedextensiveresourcestomakingweb-basedsupplychainsolutionsakeypriority:MaerskhasinvestedheavilyinITthroughitson-linesystem,M*Power,whichenablesintegratedandcustomizedlogisticssolutionsAPLisaleaderinshippingrelatedon-lineservicesandhasextensiveITcapabilitiestosupplychainmanagementsolutionsDanzashasinvestedinanumberofB2CandB2BsolutionstosupportafullrangeofsupplychainserviceofferingUPShasinvestedinNetCel360,formedanalliancewithNetworkSolutionsanddevelopedasetofon-linetoolstoimprovee-commercecapabilitiesFedExhascreatedaportal,investedinTradeCompass,andformedallianceswithSAPandKPMGtoboostFedExcapabilitytomanagedigitalsupplychains8Point/FinalVersion/LogisticsIndustryOutlook-final/83As the supply chain becomes increasingly digitised, IT based services are becoming a core competency for any major logistics services providerElectroniccommercesupportingsupplierrelationshipsviaEFTandEDIRealtimevisibilityintoproduction/materialcontrolsystemsforreplenishmentLong-termcontractswithbuilt-injointcostobjectivesForecastingaugmentedbyadvancedsharingofallnecessaryinformationDemandinformationpullsordersthroughoutRealtimevisibilityofproductionscheduleandJITsupplierdeliveryEarlywarningsystemsofproblemsElectronicordertracking,communicationsandinquiryElectronicvisibilityofstocklevelsbylocationTechnologytoolsforcustomerinterfaceCommonsupplychaindatabase“TotalProduct”conceptwithsingleviewofinventorySupplychainpartnersactinparallelbasedonsharedinformationConsumerdemandinformationdrivessupplychainCommonunderstandingofsupplychainfact-baseOn-lineordertrackingPricetoolsConsumerWholesalerSuppliersManufacturersRetailerFunds ConduitProduct ConduitInformation ConduitSource:A.T.KearneySelected E-logistics Services8Point/FinalVersion/LogisticsIndustryOutlook-final/84Maersk has invested heavily in IT through its on-line system, M*Power, which enables integrated and customized logistics solutionsM*Power WebprovidesfullinformationonthestatusofeachindividualorderM*Power Airfreight enablestrackingofairfreightconsignmentsM*Power SPOT providesallclientswithanon-lineviewtothestatusoftheircargoM*PowerTM Analysisisthereportingtoolforin-depthanalysisofallinformationM*Power Shipper enablestheshippertodoallmaintasksrelatedtoexportingofgoodsToEstablishauniquesuiteofITsystemscalledM*Power designedforon-lineaccesstologisticsdataandindividuallyadaptedtoeachclientsuniquerequirementsToallowincreasedvisibilityforbothshippersandconsigneesoftheirpurchaseordersandinventoryofgoodsinthesupplychainToofferintegratedE-enabledlogisticssolutionstoclientsSource:Companyreports;A.T.KearneyAnalysis“expanding our clients options to obtain complete supply chain visibility, from the time the purchase orders are issued, until the goods have arrived as planned. Depending on the level of sophistication we offer tailor-made solutions, combing one or more M*Power products that suit the requirements of specific clients at any given time”IT InitiativesRationaleObjectiveMaerskCase Study8Point/FinalVersion/LogisticsIndustryOutlook-final/85APL is a leader in shipping related on-line services and has extensive IT capabilities to supply chain management solutionsNetTrac providescustomer-specificITtrackingdowntotheindividualpurchaseofferandSKUlevelE-bookingoffersinternet-basedelectronicbookingincludingmaintenanceofaccountDomestic Trackingcapturesinformationaboutthedomesticdistributionofmerchandiseincludingmanagementandcontrolofinventories,trackingandprovidinglogistics,scheduleandwarehousereportsScan & PakWeblinkallowsdownloadingofPOdataorsendingoffactoryASNdataviatheInternetTobetheindustryleaderinsupply-chainvisibility,andthefirsttosendandreceivePOandASNs(advancedshippingnotice)electronically,aswellastoputaPO/shipmenttrackingapplicationtotheInternetTodevelopaglobalInformationServicesorganizationintegratingthesystemscapabilitywithestablishedlogisticsexperienceSource:Companyreports;A.T.KearneyAnalysis“APL Logistics is uniquely positioned to leverage its considerable IT capabilities with the extensive infrastructure of the NOL Group Management of all supply-chain elements allows us, as a carrier-neutral service provider, to deliver one-stop cargo-flow solutions” IT InitiativesRationaleObjectiveAPLCase Study8Point/FinalVersion/LogisticsIndustryOutlook-final/86Danzas has invested in a number of B2C and B2B solutions to support a full range of supply chain servicesInvestmentsinB2Capplications:eVITAprovidingonlinestart-upcompanieswiththecapabilitytomarketproductsviaasafeset-upenvironmenteCommerceServices(ECS)servingbackendactivitiesascreditcardcertificationThePostBank(underdevelopment)actingasthelargesteTailbankinEuropeInvestmentsinB2Bapplications:Joinedanonlinemarketplaceventure:I2I(industrytoindustry)handlingtransportationanddistributionissuesImplementinganintegratedinterfacetoenhancethemoduleSAPR3offeringdirectaccesstoitswarehousingapplicationsystemLaunchedneweCommerceprojecttolinkitsownB2Cservicesandapplicationswiththosecreatedbyitsacquirer,DeutschePostToofferafullrangeofE-bizsolutionstoservebothfrontandbackendsofthemarketplacewithlinkagewithsuchtraditionalapplicationsasWMSandtrackandtraceTooffertailoredsolutionstoclientsinB2BsectorandexpandthecompanyscapabilitiesinservingthissectorToprovideaseamlessservicethatcoverstheentiresupplychainToensureallsynergiesbetweenDanzasandDeutschePostbeenexploitedandthereisnoduplicationofeffortsanddevelopmentswithinthelattersvarioustransportanddistributiondivisionsSource:Companyreports;A.T.KearneyAnalysisTo develop the necessary E-enabled operations, services, processes and applications to meet new client demands in the logistics industryIT InitiativesRationaleObjectiveDanzasCase Study8Point/FinalVersion/LogisticsIndustryOutlook-final/87UPS has invested in NetCel360, formed an alliance with Network Solutions and developed a set of on-line tools to improve e-commerce capabilitiesFormedstrategicalliancewithNetworkSolutionstotargetdomesticsmallbusinessesInvestedinNetCel360Ltd.,aPan-Asianproviderofe-commerceoutsourcingsolutionsDevelopedsystemsolutionsforhomegrocerydeliveryindustryFormedUPSe-Venturetoserveasinvestmentvehiclefortechnologystart-upsDeveloped,bye-Venture,UPSe-LogisticsasacombinationofERPordermanagementandfinancialsystemsalongwithwarehousemanagementanddemandplanningandforecastingsystemCreatedasetofonlinemodules,theUPSOnLineToolsbasedonvarioustransportationandlogisticsrequirementsofclients,somedownloadablefromwebsiteDevelopedmultipleweb-enabledapplicationswithlinkstothecompanysERPsystemandallowingtrackingofeventsacrossthesupplychainToexpandUPSe-businessproductandserviceofferingsTocapturerapidlygrowingB2Be-commercemarketinAsiaTotakeadvantageoffastgrowingconsumerdirecthomedeliveryindustryToidentifyandrapidlydevelopentirelynewbusinessrelatedtosupplychainmanagementande-commerceToofferconfigurabletoolsforcustomerstoadapttotheirindividualneedsTohelpcustomersstreamlinetheirbusinessprocessesandimprovebusinessrelationshipwiththecarrierToexpandcapabilitiesinofferingoptimizedsupplychainmanagementservicesSource:Companyreports;A.T.KearneyAnalysisTo become an E-commerce services company by continually adding on more services through internetIT InitiativesRationaleObjectiveUPSCase Study8Point/FinalVersion/LogisticsIndustryOutlook-final/88FedEx has created a portal, invested in TradeCompass, and formed alliances with SAP and KPMG to boost its capability to manage digital supply chainsCreatedapowerfulFedExinternetpackageshippingportalonNetscapesNetcenterInvestedinG-Log,aglobaltransportationmanagementsystemsproviderFormedstrategicalliancewithSAPtodevelopandmarketa“one-stop”portfolioofsupplychainservicesFormedstrategicalliancewithKPMGtodelivercompletesupplychainsolutionstolargeandmid-sizedcompaniesInvestedinTradeCompass,acompanyspecializingininternationaltradeinformationToacquirenewcustomersandgeneratenewrevenuesourcesontheinternetToincorporateG-Logsweb-basedsystemintotheFedExsglobalsupplychainsolutionTomeetthegrowingdemandforsingleintegratorfortheentiresupplychainToleverageKPMTssupplychainconsultingande-integrationskills,whichcomplementsFDXslogisticsserviceexpertiseToaddnewcontentofinternationaltradetoitsinformationserviceportfolioToturnNTEscapabilitytowidercommercialuseSource:Companyreports;A.T.KearneyAnalysis Become an infomediary between a company and its supply chain on a global basisIT InitiativesRationaleObjectiveFedExCase Study8Point/FinalVersion/LogisticsIndustryOutlook-final/89Appendix8Point/FinalVersion/LogisticsIndustryOutlook-final/90Maersk LogisticsUS$900MnMaerskLogisticsTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company NameMaersk Logistics offerings include:Oceanfreight,airfreight,warehousinganddistributionForecastofinventoryandsourcingofrawmaterials.Managefreightpayments,customduties,lettersofcredit.Developed INTRA, a common carrier platform for e-commerce that includes booking, tracking capabilitiesDeveloped a Management Information System called M*Power. ItTrackscargofrompurchasetodistribution.Hasorderupdates,notificationofexceptionsOfferspresetcorrectivemeasurethatareestablishedbetweenMaerskLogisticsandcustomerLinksvendorsatorigintostartthemanagementprocessofthesupplychainMaersk Logistics works with international shippers to reduce the total logistics cycle from production to deliveryRepresented in 70 countries. Includes the following facilities:6officesinCentralAmerica,thecaribbeanandMexico.13officesinChina3distributioncentersinCalifornia.250,000sqfootfacilityinNorfolk,VA.FacilitiesinSeattleandAtlantaSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/91NOL/APLUS$4,612MnUS$479MnAPLTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company NameWith the acquisition of GATX became the 12th largest 3PL in the US (measured by revenues) The acquisition added 21 Mn Square feet of distribution space NorthAmerica:19,897,000sqftMexico:145,000sqftCanada:260,000sqftChile:480,000sqftPuertoRico:80,000sqftCostaRica:100,000sqftArgentina:38,000sqft APL Services divided in four groups: Consolidation:groupshipmentstogetherIntermodalmanagementservicesContractlogisticsconsulting:DesignedsolutionstoimprovethesupplychainAutomotivelogistics:SpecializedservicesforautomobilecompaniesSupply chain services from end-to-end, starting from sourcing all the way to finished goods distribution Atorigin:delivertowarehouse(oftentheirown).CantakecareofdocumentsofnecessaryConsolidation:IfitdoesnttakeupafullcontainertheywillgroupwithothershipmentsTransportation:Bysea,air,intermodalDestination:Warehousing,orderprocessing,orderpicking,transportationOffercustomizedeventandexceptionmanagementsolutions115 warehouses in 55 countries, including North America, Latin America, Europe, South-East Asia and China Client can follow product online at the SKU level Less than 50% of APL Logistics outsourced sea transportation needs are carried via APL container shipping vesselsSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/92NYKUS$10,300MnUS$1,500MnNYKTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company Name Offers logistics services through 39 companies in 21 countries in Asia, North America, Australia and Europe. Plans to expand to China, Eastern Europe and Latin AmericaEmploys about 5000 for the logistics businesses Has identified logistics as a as a core business Offerings include the following: SupplychainmanagementfromsourcingtofinalsaleMinimizeinventoriesNYKwantstolinkalltransportmodes,includingsea,landandairWarehousingDistributionConsolidationForwarding NYK owns 85 warehouses and distribution centers around the world. The distribution centers are mostly located in EuropeSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/93P&OUS$6,397MnPOCL:US$154MnPOTE:US$1,456MnPOTE&POCLTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company Name2 logistics division: P&O Trans European (POTE) and P&O Cold Logistics (POCL) POTE: SectorFocus:Industrial:21%Retail:5%ConsumerElectronics:21%Automotive:25%Petrochemical:25%Other:3%800,000sqfeetofwarehousingandstoragein160locationsintheUKandContinentalEurope1200Trucksand2600trailerunitsHasdedicatedfacilitiesforclientssuchasOpel,GM,DowChemicalPOCLAustralianmarketleader(54%)forchilledfooddistributionfacilitiesand6thbiggestworldwideHighlyautomatedConsolidatesshipmentsanddeliversJITtosupermarketsfromdirectdatafeedsManagesstocksandsalesdatabaseAlsohasstrongpresenceinNewZealandandSouthernUS Comment: Noclearstrategicdirection.Thecompanyisnottryingtodiversifyorgrowitslogisticsactivitysignificantly.DoesnothaveaglobalpresenceSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/94Hapag-LloydEURO940MnEURO166MnEURO329MnVTG-LehnkeringPrachtFreightForwardingFrenchAlgecoTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company Name Logistics is concentrated among three companies: VTG-Lehnkering, Pracht Freight Forwarding, French Algeco VTG-Lehnkering:Ownscustomizedequipmenttotransfershipmentsbyroad,railandwaterways.Specializesinoil,chemicalandpetrochemicalindustriesPrachtFreightForwarding:Offeringsinclude:ConsolidationWarehousingDistributionAlgeco:Produces,sellsandleasescontainermodules Hapag-Lloyd has transport data automatically fed into its Web site. Hapag-Lloyd has the following online capabilities: CargobookingTrackingPrintingofimportdocumentsSource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/95MOLUS$8,300MnUS$652MnM.OAirSystemCougarHoldingsPTELtd,M.O.LogisticsNetherlandsB.V.HongKongLogisticsTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company NameMOL has many logistics companies and operations worldwide. It is in the process of consolidating them to better leverage its resources globally. The entity will be know as MOL Logistics Offer forwarding and warehousing services Assists customers in establishing supply chain management systems Has a prominent position in Europe in the distribution of wines and spirits Operates parts center for BMW in Southeast Asia Source:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/96OOCLUS$2,400MnOOCLTotal Company RevenuesFY 2000 Logistics RevenuesLogistics Company Name Cargo System, OOCLs logistics arm, provides specialized supply chain management solutions to its client base. It has 59 offices and is well established in mainland ChinaOOCL developed CargoSmart, an internet portal that has the following capabilities: Booking Tracking Access to documentation Schedule enquirySource:2000AnnualReports,MSDW,AmericanShipper,A.T.Kearneyanalysis8Point/FinalVersion/LogisticsIndustryOutlook-final/97General comments from COSCO and A.T. Kearney RemarksStudyonpartnershipopportunitiesforLogisticsBUwillbeidentifiedinaseparateworkstreamPleaseprovideanalysisonpartnering/allianceopportunitiesforlogisticsbusiness,includingpotentialpartneringareas,targets,andfeasibility(considerbothlogisticsandITcompanies)PendingfurtherdiscussiononscopeandprojectprioritiesLogisticsbusinessisproductcenteredbusiness,pleaseprovidestudyonmarketdemand,competitiveenvironmentandtrendsbyproduct:Keyproductgroupsinclude:Auto(CKDandOEM),homeappliance,exhibition,retailgoods,distributioncenter(China),shippingagency,etc.ATK RemarksCOSCO CommentsPendingfurtherdiscussiononscopeandprojectprioritiesIntroductionofITsuppliersforlogisticsbusinessModifiedaccordinglyDetailedcommentsonP688Point/FinalVersion/LogisticsIndustryOutlook-final/989、静夜四无邻，荒居旧业贫。2024/9/142024/9/14Saturday, September 14, 202410、雨中黄叶树，灯下白头人。2024/9/142024/9/142024/9/149/14/2024 1:40:50 AM11、以我独沈久，愧君相见频。2024/9/142024/9/142024/9/14Sep-2414-Sep-2412、故人江海别，几度隔山川。2024/9/142024/9/142024/9/14Saturday, September 14, 202413、乍见翻疑梦，相悲各问年。2024/9/142024/9/142024/9/142024/9/149/14/202414、他乡生白发，旧国见青山。14 九月 20242024/9/142024/9/142024/9/1415、比不了得就不比，得不到的就不要。九月 242024/9/142024/9/142024/9/149/14/202416、行动出成果，工作出财富。2024/9/142024/9/1414 September 202417、做前，能够环视四周；做时，你只能或者最好沿着以脚为起点的射线向前。2024/9/142024/9/142024/9/142024/9/149、没有失败，只有暂时停止成功！。2024/9/142024/9/14Saturday, September 14, 202410、很多事情努力了未必有结果，但是不努力却什么改变也没有。2024/9/142024/9/142024/9/149/14/2024 1:40:50 AM11、成功就是日复一日那一点点小小努力的积累。2024/9/142024/9/142024/9/14Sep-2414-Sep-2412、世间成事，不求其绝对圆满，留一份不足，可得无限完美。2024/9/142024/9/142024/9/14Saturday, September 14, 202413、不知香积寺，数里入云峰。2024/9/142024/9/142024/9/142024/9/149/14/202414、意志坚强的人能把世界放在手中像泥块一样任意揉捏。14 九月 20242024/9/142024/9/142024/9/1415、楚塞三湘接，荆门九派通。九月 242024/9/142024/9/142024/9/149/14/202416、少年十五二十时，步行夺得胡马骑。2024/9/142024/9/1414 September 202417、空山新雨后，天气晚来秋。2024/9/142024/9/142024/9/142024/9/149、杨柳散和风，青山澹吾虑。2024/9/142024/9/14Saturday, September 14, 202410、阅读一切好书如同和过去最杰出的人谈话。2024/9/142024/9/142024/9/149/14/2024 1:40:50 AM11、越是没有本领的就越加自命不凡。2024/9/142024/9/142024/9/14Sep-2414-Sep-2412、越是无能的人，越喜欢挑剔别人的错儿。2024/9/142024/9/142024/9/14Saturday, September 14, 202413、知人者智，自知者明。胜人者有力，自胜者强。2024/9/142024/9/142024/9/142024/9/149/14/202414、意志坚强的人能把世界放在手中像泥块一样任意揉捏。14 九月 20242024/9/142024/9/142024/9/1415、最具挑战性的挑战莫过于提升自我。九月 242024/9/142024/9/142024/9/149/14/202416、业余生活要有意义，不要越轨。2024/9/142024/9/1414 September 202417、一个人即使已登上顶峰，也仍要自强不息。2024/9/142024/9/142024/9/142024/9/14MOMODA POWERPOINTLorem ipsum dolor sit, eleifend nulla ac, fringilla purus. 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