8Sec 5 Competitor Analysis.ppt

Page 5-1,5.1.General Competitor Profiles,The logistics service providers in Ningbo region can be roughly classified into two categories,namely the asset based operation companies and the non-asset based management companies.Operation companies normally include those warehousing companies or transportation companies,which have warehouse,cranes,tractors,and related fixed assets.The business scope of the operation companies ranges from transportation,storage,striping and grouping,as well as other services like container repair.Management companies can be classified into two categories,namely forwarders and customs declaration agents.The management companies normally provide forwarding or customs declaration services to those manufacturers or traders.In some cases,management companies will also serve as a freight broker and provide package services including packing,transportation,and storage by outsourcing the operational services to transportation companies or warehousing companies.Some forwarders like Ningbo South East International Freight Co.Ltd.are also capable of providing carrier routing services to their clients.While some operation companies have been developing management capabilities and enable themselves as integrated logistics service providers,a number of forwarders also spin off their operation arms as they cannot obtain economies of scale by simply providing services to themselves.,Overview of Different Logistics Service Providers,Page 5-2,5.1.General Competitor Profiles,The following exhibit illustrates the logistics industry value chain and key categories of service providers around the Ningbo Port region.:,Road Transportation,Warehousing&Container Handling,Customer ServiceManagement,Service,Truck management,Storage Stacking Stripping and stuffing Container repairs,Booking and carrier negotiationCustoms declarationConsolidationIntermodal transportation management Carrier routing,Provider,Transportation Companies,Warehousing Companies,Forwarder/Customs Declaration Agency,Integrator/Freight Broker,Asset Based Operation,Non Asset Based Management,Exhibit 5.1 Categories of Service Providers in Ningbo,Source:AA Interview and Analysis,Overview of Different Logistics Service Providers,Page 5-3,5.1.General Competitor Profiles,Freight Forwarders,There are 36 freight forwarders in Ningbo at the moment,according to the statistics provided by Ningbo Port Authority.As the foreign participation in forwarding services are strictly restricted by the existing regulation,the existing freight forwarding market in Ningbo is currently dominated by a few companies.Since the manufacturers and traders have less choice,the relatively large bargaining power of the existing forwarders in Ningbo do not have the incentive to introduce those value-added services like consolidation,sorting,repacking,labeling,etc.In addition,the existing forwarders are also inefficient in handling those value-added services like freight consolidation.Some of the forwarders like Ningbo South East International Freight Co.Ltd.have contractual relationships with warehousing companies and/or transportation companies to enable integrated service offerings.Others like Ningbo Taiping have their own container storage and handling facilities.,Page 5-4,First-Class Forwarders,5.1.General Competitor Profiles,Forwarding Service Structure,Second-Class Forwarders,Trading Company/Manufacturer,According to the existing government regulations,there are two categories of forwarders,namely first-class and second-class forwarders.It is stipulated that only the first-class forwarders have ship booking rights of carrier space and the second-class forwarders shall book space from the first-class forwarders.As such,there are two service channels for first-class forwarders including direct sales,and sales from second-class forwarders.It is estimated by the forwarders we interviewed that around 40 percent of sales were achieved from direct sales and the rest from second-class forwarders in Ningbo.,Source:AA Interview and Analysis,Exhibit 5.2 Service Channels for Forwarding,Page 5-5,Sinotrans Zhejiang Group accounts for 60%of the market share,5.1.General Competitor Profiles,Market Share of Major Forwarders,Source:AA Interview and Analysis,As five of the total seven first-class forwarders in Ningbo belongs to Sinotrans Zhejiang Group and accounts for roughly 60%of the forwarding market,the forwarding market in Ningbo is obviously an oligopoly market.Exhibit 5.3 shows the market share of the seven first-class forwarders in Ningbo:,Exhibit 5.3 Market Share of Forwarding,Page 5-6,There are 19 operation companies within the Ningbo Free Trade Zone,which mainly focus on container freight station and related businesses.The total container freight station and container storage space are 123,601 and 95,532 square meter respectively.Normally,those companies provide transportation,storage,stripping and grouping services.In some cases,those companies will also provide door-to-door services if the customers are in the Ningbo region.It is noted that door-to-door services provided for customers far away from the Ningbo region are not cost-wise feasible as the road tolls will significantly raise the transportation cost.Among the logistics companies in the Zone,only Gaoxin Container and PIL Logistics have trucks and have the exclusive rights to provide the internal transportation service between the port area and the Ningbo Free Trade Zone.In addition,PIL Logistics is also able to provide intermodal management services.At the moment,only Gaoxin Container provides domestic distribution service for multinational enterprises,which is normally considered as one of the value-added services for logistics operators.In some cases,Gaoxin Container also provided transshipment services,involving some sort of stripping and grouping services.As Gaoxin Container and PIL Logistics have reduced their pricing to remain competitive compared to those general warehouses outside the Free Trade Zone,the customer would like to store their goods in warehouses of Gaoxin Container and PIL Logistics as these two companies have very good relationships with customs administration and can help expedite the customs declaration process.,Operation Companies,5.1.General Competitor Profiles,Page 5-7,5.2.Competitive Positioning,Considering the proposed services of IPSC will be mainly in the field of container freight station,transshipping platform and container handling,we think it is appropriate to treat the existing logistics companies in the Ningbo Free Trade Zone as immediate competitors.We also include Xunda Storage Transport Co.Ltd.,the only bonded warehouse outside the Free Trade Zone,as a competitor.It is noted that most of the existing logistics companies are competing on the low-end service market,which normally provide those general services including transportation,stripping and grouping as well as stacking.,Source:AA Interview and Analysis,Exhibit 5.4 Competitive Positioning,Page 5-8,5.3.Competitive Moves,GX,Gaoxin Container,PIL,PIL,HH,Honghai Property Development,ZJ,Zhejin Storage,XD,Xunda Storage Transport,GX,ZJ,XD,PIL,HH,Like elsewhere in the world,the distinctions of different categories of players in the region have been increasingly blurred.Our research found most of the players intend to vertically extend to other areas along the value chain to provide full range of services,which is largely due to the fact that the current container storage capacity is over-supplied at the moment.Gaoxin Container,for example,is proposed to provide forwarding services and enable itself to be an integrated service provider in the market.,Source:AA Interview and Analysis,Exhibit 5.5 Competitive Move,Depth of Service,Customer Demand,ZJ,GX,HH,Page 5-9,5.4.Profiles of Major Competitors,Summary of Key Information of Major Competitors,*About RMB28 million comes from storage business,Source:AA Interview,Exhibit 5.6 Key Competitor Information,Page 5-10,5.4.Profiles of Major Competitors,Gaoxin Container,Company history and ownershipJointly invested by Ningbo Free Trade Zone Controlling Company and China Light Textile Investing Company with 40%and 60%stake respectivelyCustomer baseMajor customers include forwarders,customs brokersScope of service offeringsWarehousing,container freight station,container handling,road transportation PricingLifting On/Off:RMB 100 per TEUStripping and grouping:RMB 350 per TEUContainer storage:RMB 3 per TEU per day,Page 5-11,5.4.Profiles of Major Competitors,Gaoxin Container(Contd),Equipment&technologyFour 3-ton and one 7-ton forklift trucks,one 25-ton crane for empty container,one 45 ton crane for loaded container and four tractorsEDI linkage with Customs AdministrationFuture moves and underlying reasonsPlan for 2nd phase investment with 7,000 square meter container yard area and 5,000 square meter warehouse as shipping companies would view large container yard area as a competitive edge to store their empty containers.The future capacity will be built close to the current sitePerceived CompetitorVictoria,the vendor outside the Free Trade Zone,play a leading role in container handling in NingboUnique operational practicesExclusive rights approved by the Port Authority to provide internal transportation services between the Port area and the Free Trade ZoneRoughly 10%of the storage capacity is served as distribution center for some multinationals,Page 5-12,5.4.Profiles of Major Competitors,PIL Logistics,Company history and ownershipJointly invested by Singapore Pacific International Lines,Sinotrans Zhejiang,and Huaneng Customer baseMajor customers include:forwarders,custom declaration agencies and shipping companiesScope of service offeringsWarehousing,container freight station,container handling,and road transportationPricingLifting On/Off:RMB 100 per TEUStripping and grouping:RMB 300 per TEUContainer storage:RMB 3 per TEU per dayInternal price is about 5-10 per cent below average for its own subsidiaries,Page 5-13,5.4.Profiles of Major Competitors,PIL Logistics(Contd),Equipment&technologyTwo 15-ton forklift trucks for empties container and one 43-ton forklift trucks for loaded container,and 22 tractorsEDI linkage with Customs Administration Future moves and underlying reasonsRemain status quo as it is still striving for survivalPerceived CompetitorPerceive Gaoxin Container as the best performer in the Free Trade ZoneUnique operational practicesJoint with it forwarding arm to provide integrated servicesExclusive right to provide internal transportation between the Port area and the Free Trade ZoneNormally provide door-to-door services to its customers,Page 5-14,5.4.Profiles of Major Competitors,Honghai Property Development,Company history and ownershipJoint venture with NingBo Free Trade Zone,NingBo Finance Development Co.,and Zhejiang Real Estate Development Co.holding 60%,20%,and 20%stake respectively Customer baseMajor customers include customs declaration agency,traders and manufactures accounting for 50%,30%and 20%of total revenue respectively.Scope of service offeringsReal estate development and property managementWarehousing,container freight station,container handlingPricingCargo storage:RMB 0.20-0.30 per ton per dayContainer storage:RMB 0.4 per ton per dayLoading:RMB 10.0 per ton,Page 5-15,5.4.Profiles of Major Competitors,Honghai Property Development(Contd),Equipment&technologyOne 15-ton empties forklift trucksEDI linkage with Custom AdministrationFuture moves and underlying reasonsSet up domestic distribution facilityTailor warehouses to meet the special storage requirements of certain goods such as textile,mechanical appliance to tap the value-add service marketPerceived CompetitorPerceive Gaoxin Container and PIL Logistics as the major competitors as they have more advanced equipment,Page 5-16,5.4.Profiles of Major Competitors,Zhejin Storage,Company history and ownershipInvested by Zhejiang Mental Material Co.Ltd.and Zhejiang Jinsheng Trading Co.Ltd.at July,1998Customer baseMajor customers include forwarders and cargo owner with each accounting for 50%revenueScope of service offeringsWarehousing,container freight station,container handling and road transportationPricingStripping:RMB 400 for 40 container and RMB 230 for 20containerContainer storage:RMB 0.30-0.40 per ton per dayLoading:RMB 10.00 per ton,Page 5-17,5.4.Profiles of Major Competitors,Zhejin Storage(Contd),Equipment&technologyIn-house Crane and auto fire control system 50 ton electronic truck steelyard EDI linkage with the Custom AdministrationFuture moves and underlying reasonsIntend to be the distribution centers for multinationals as it perceives the future market demand will be hugeRenovate of current storage yard into container freight station,Page 5-18,5.4.Profiles of Major Competitors,Xunda Storage Transport,Company history and ownershipA wholly private owned warehousing company founded in 1987Customer baseMajor customers include forwarders and shipping companies.Scope of service offeringsWarehousing,container freight station,container handling and road transportationPricingHauling(Port-Storage):Loaded:RMB 200 per day for 20 container,RMB 300 per day for 40 containerEmpties:RMB 60 day for 40 container,RMB 100 per day for 40 container Container lifting:Loaded:RMB 60 per day for 20 container,RMB 100 per day for 40 containerEmpties:RMB 30 day for 40 container,RMB 50 per day for 40 container,Page 5-19,5.4.Profiles of Major Competitor,Xunda Storage Transport(Contd),Pricing(Contd)Container storage:Loaded:RMB 5 per day for 20 container,RMB 10 per day for 40 containerEmpties:RMB 2 day for 40 container,RMB 3 per day for 40 containerEquipment&technologyOne 16 ton and one 25 ton crane,5 forklift,and 40 tractorsFuture moves and underlying reasonsPlan for future expansion as it does not have enough spacePerceived CompetitorGaoxin and Changshen,who are joint ventures with big asset size and more personnelUnique operational practicesThe only warehouse outside the Free Trade Zone that is under Customs surveillance,Page 5-20,5.5.Competitive Analysis for Industry Zones,During the last two decades,the State Council has authorized the establishment of a variety of economic and technical development zones,hi-tech development zones,free trade zones etc.By the end of 1999,there were 122 state-level development zones and over 400 province-level development zones in China.In Zhejiang Province,there are 7 state-level development zones,most of which are located in Hangzhou and Ningbo.In addition,there are a certain number of province-level and county-level industry parks in the region.With the flux of industry parks all over the country,their quality vary among parks.Those better developed industry parks can function as foreign-oriented industrial and processing zone,while those less well-developed parks are only dressed-up real estate developments.While the foreign investment have been dwindling during the last several years,many of the zones are fa