CEVA Logistics, the world's fourth-largest third-party logistics company by revenue, is aiming to double its market share in China in the next three years, after a joint venture with a Chinese vehicle manufacturer established it as a leader in the automotive supply chain.
John Pattullo, chief executive officer of the Netherlands-based company, said that it aimed to achieve a 5 percent share of China's booming logistics outsourcing market by 2013.
"China represents a major strong growth opportunity for CEVA. We are already well positioned across the entire supply chain in China, and we are building our capability and leveraging our integrated global network to support Chinese companies' globalization," Pattullo told a news conference in Shanghai. Third-party logistics providers offer a one-stop service to outsourced logistics services customers for part, or all of their supply chain management functions.
Pattullo said that in China, only 3 percent of companies opted for a specialist to handle their logistics requirements, while the global average was 20 percent. China is CEVA's fastest growing market and accounted for more than 10 percent of its 6.8 billion euro ($9.8 billion) global revenue last year, said Ditlev Blicher, executive vice-president of the company's North Asia branch. CEVA was founded in 2007 following the merger of logistics giants TNT Logistics and EGL Eagle Global Logistics. It enjoyed 25 percent year-on-year growth in 2010, and has a presence in four continents.
It formed its first automotive logistics joint venture in China with Shanghai Automotive Industry Sales Corp in 2002.
The venture, Anji-CEVA Automotive Logistics Co Ltd, has contributed 94 million euros to the group's overall revenue.
Fueled by robust growth in the automotive sector, which currently accounts for a quarter of its business, the company will leverage its highly integrated services, including air, ocean, ground and warehousing, to advance to other industries such as technology, retail and energy. CEVA operates in 88 sites across China and has around 14,000 employees.
It had more than 1.4 million square meters of storage space and its air volumes hit 222,000 tons by the end of last year. Its major customers in China have included Johnson & Johnson Services Inc, BMW AG, and General Electric Co.
Pattullo said that the company would increase its investment in China's inland cities in order to boost sales, but did not elaborate. Logistics expenditures encompassing transport, storage and management reached 7.1 trillion yuan, equivalent to 17.8 percent of China's gross domestic product in 2010, according to a report from the National Development and Reform Commission.
China will reduce tax burdens on logistics enterprises, grant more favorable land policies to them, and promote the convenient transport of logistics vehicles, according to a guideline issued recently by the State Council.
Pattullo said China's 12th Five-Year Plan (2011-2015) has provided incentives and opportunities for the industry to flourish and the company to grow. "The development of industrial parks and infrastructure building are the two benefits we can get from government policies."