Kerry grows with China
Hong Kong-based logistics company becoming a force in contract logistics, distribution and transportation.
By Eric Johnson
China isn't exactly an unknown market to the world's shippers and logistics companies. But still, it sometimes pays to have the home-field advantage.
And that's partly why Hong Kong-based Kerry Logistics has become one of the Asia-Pacific region's biggest logistics service providers without a lot of fanfare.
Kerry operates 100 logistics centers in 55 Chinese cities and has seven more either completed or under development in five Asia-Pacific countries. It also operates container yards in Tianjin and Dalian, another one in Malaysia, a container and breakbulk ocean terminal in Thailand and a rail terminal and container yard in Adelaide, Australia.
Seven of its Chinese logistics facilities are wholly owned ' in Beijing, Tianjin, Shanghai, Shenzhen (Yantian and Futian), Chengdu and Fuzhou. Three more are scheduled to be built in Pujiang, Chongqing and Kushan by 2011, and a new logistics center is also being built in Xiamen in Southeast China, ahead of what the company expects will be a significant increase in trade between the coastal city and Taiwan.
Kerry's development is borne out of a focus on China's domestic logistics scene, but it has grown beyond those bounds in recent years.
'Our China logistics network is the bedrock of the company,' Kenneth Ko, executive director of international freight forwarding for Kerry, said in an interview with American Shipper. 'We built this out of developing our warehousing business and moving into providing high value-added logistics services for some of the world's leading fashion, retail and technology brands.'
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| 'We built this out of developing our warehousing business and moving into providing high value-added logistics services for some of the world's leading fashion, retail and technology brands.' | |
| Kenneth Ko executive director international freight, Kerry Logistics |
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The company began in 1999 as a provider of logistics for Internet-sales products in Hong Kong, and has steadily blossomed over the past decade. It is a subsidiary of Kerry Properties, part of Asian conglomerate Kuok Group. The company operates through three major divisions:
' Freight forwarding
' Express parcel delivery
' Contract logistics, warehousing and distribution.
'Kerry Logistics has one of the most comprehensive China distribution and logistics networks,' Ko said. 'Our advantage is that we are an Asian-based company and we understand the market and the complex rules and regulations governing the transport and logistics sector at the local, provincial and national level.
'We also have long established relationships with suppliers, government officials and manufacturers, so we are able to provide a more responsive service to meet the needs of our customers that provides us with a competitive advantage. In short, we have local expertise but with a global perspective.'
Aside from warehousing, Kerry also provides transportation services, a growing industry in China and Southeast Asia since the trucking industry in the region is incredibly fragmented and often mysterious for foreign shippers.
'Another key strategic development is our Southeast Asian logistics network and the corresponding growth of our Kerry Asia Road Transport (KART) network, which connects Singapore, Malaysia, Thailand, Vietnam, Laos and Cambodia,' Ko said. 'Our customers are demanding high-quality, reliable transport solutions which connect our logistics centers and warehouses around the region. We have now connected the Southeast Asian network into our China road network through Kunming to tap into the significant growth in trade between Vietnam and Southwest China.'
The road network and a smattering of logistics centers throughout Asia provide a snapshot of how Kerry sees itself. Ko said Kerry is Asia-based, with a China focus and a global network. Growing demand for imported goods and domestic logistics services in China feeds right into the company's strengths.
'Having a platform in Asia is our strategic advantage as the region is the world's major manufacturing center,' he said. 'Kerry Logistics built its business by providing a full range of import-export freight forwarding services. Now we are leveraging our Asia regional network to meet growing demand for logistics services driven by consumer demand for imported products, notably in fashion, electronics, retail, perishables, automotive, food and beverage.'
Ko pointed to statistics from IHS Global Insight, which projects that the market share of foreign retail brands in China will increase from 20 percent of the retail market currently, to 40 percent in 2014. He added that Kerry manages logistics for more than 40 fashion and retail companies, most of which are international brand leaders.
The company is not merely relying on the development of its domestic and inbound business and caters extensively to exports as well. In 2007, American Shipper toured its massive Yantian facility, mere yards away from one of Asia's biggest container terminals. And international expansion remains a focus.
'Our global network has been expanded over the years to Europe, North America and the Middle East as we wanted to get closer to our customers in those markets,' Ko said. 'China is an important market for our international brand name clients and Kerry Logistics is well positioned to grow in this sector.'
He said the transpacific market is also in Kerry's growth plans: 'The transpacific trade is important to Kerry Logistics and we have been working in the U.S. through a joint venture (with Seattle-based Lynden International), which has been very successful. In parallel we have established our own presence in North America and we are looking for opportunities to expand in key markets.'
But China remains the company's bread and butter, both in terms of export-oriented logistics and inbound and domestic activity. That balance served Kerry well during the economic downturn, when Chinese exports were hit.
'As with most companies the downturn affected us as international trade declined,' Ko said. 'However as growth in the China domestic market remained strong during the economic crisis we were able to leverage our extensive domestic network and results were very positive. Now during the recovery we are also benefiting from an increase in international imports and exports and sustained demand in China's domestic sector.'
Growth in inland sections of China is feeding further growth.
'We see the development in West and Central China as key areas for Kerry
Logistics as manufacturers migrate away from the coastal areas of China where salaries and land prices are more expensive,' Ko said.