We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Get ready for logistics mergers in China
Forward Thinking

Get ready for logistics mergers in China

September 22, 2010
Supply Chain Quarterly Staff
No Comments

China's fragmented transportation and third-party logistics industry will soon begin to consolidate with industry leaders emerging in the next three to five years, according to the consulting firm A.T. Kearney.

Chee Wee Gan, a principal in A.T. Kearney's Management Consulting practice in Shanghai, estimates that there are more than 18,000 contract logistics service providers of various sizes in China. In addition, he estimates that China has about one million trucking companies, the majority of which operate fewer than 10 trucks. Furthermore, the top 10 truckload carriers in China control only 3 percent of that market, and the top 20 less-than-truckload carriers only have 2 percent of that country's markets, he says.

A number of factors are driving industry consolidation, Gan says. For one thing, small providers are confronting intense price competition, and they face scale, management, and cash-flow challenges. "Costs in China are rising," Gan explains, "and with the higher operating cost environment, many weaker players will be weeded out."

Another factor behind industry consolidation is the Chinese government's recent push to further develop the country's logistics industry, which officials have characterized as "small and fragmented." "Domestic players are encouraged to expand and improve (by the government)," Gan said.

Customers are also promoting mergers because they want more coverage and capabilities from carriers and providers. Gan noted that customers "are not satisfied with the low quality service offered out there" and are increasingly looking for carriers that offer more comprehensive capabilities.

Yet the potential for consolidation does not mean that things will be easy for foreign logistics service providers interested in acquiring Chinese companies to gain a larger presence in the fast-growing nation. Gan cautions that foreign providers should be aware of a number of obstacles. For one thing, they would incur 20 to 30 percent in hidden costs related to compliance with Chinese tax, regulatory, business, health, and safety laws. In addition, the management teams at most Chinese companies are weak, in his view. Finally, many local companies will be distrustful and not in favor of being acquired.

    • Related Articles

      Procurement: Get ready for an analytics explosion

      Get ready for mobile commerce

      Get ready to go mobile

    Recent Articles by Supply Chain Quarterly Staff

    DAT Freight & Analytics says new tool tackles spike in identity fraud

    Ryder rolls out BrightDrop electric rental vans at sites in CA, TX, and NY

    FourKites launches generative AI product to uncover insights from supply chain data pools

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Wabash opens trailer manufacturing facility in Indiana

    • Six defining challenges of omnichannel fulfillment

    • Postal advocacy group says “excessive” July 9 stamp price hike will hurt consumers

    • CPKC and CSX buy rail assets from Genesee & Wyoming

    • Distribution, supply chain innovation, and a brighter a future

    Featured Video

    8757b894 244c 4429 b5d8 e6df7b479d82

    Penalties for Wood Packaging Material Violations

    Viewer Contributed
    Our Services Include: Customs Broker Denver Freight Forwarder Denver Global Logistics Denver Cargo Insurance Denver Customs Bond Denver Customs Clearance Denver Customs Duty Denver Isf Filing Denver More details: Phone : 281-445-9779 Email: info@gallaghertransport.com Website: gallaghertransport.com

    FEATURED WHITE PAPERS

    • Five questions to ask before electrifying your indoor forklift fleet

    • Operator assist system myths busted

    • Three layers of forklift safety: Promoting operating best practices

    • The Complete Guide to Automated Packaging

    View More

    Subscribe to Supply Chain Quarterly

    Get Your Subscription
    • SUBSCRIBE
    • E-NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing