Date
21 October 2017

Sinotrans well positioned to ride the logistics wave

China’s e-commerce market is expanding at a record clip as more consumers and enterprises shift to online retail. The industry is estimated to have recorded transactions worth 10 trillion yuan (US$1.65 trillion) last year, and the figure is expected to climb to 18 trillion yuan in 2015.

Amid the rapid growth, demand for logistics services is set to rise further in the country in the coming years, columnist Gao Zhihang wrote in the Hong Kong Economic Journal. 

Among the beneficiaries of this industry trend will be integrated logistics service provider Sinotrans Ltd. (00598.HK) and its unlisted parent, Sinotrans & CSC Group. The parent entity is the largest international logistics provider in China, with a wide range of businesses including freight forwarding by water, land and air.

The group is now undertaking a new round of internal restructuring. According to Gao, the parent is likely to inject its logistics business into Sinotrans Ltd., which will further round off the listed unit’s logistics network.

Sinotrans’ listed unit saw its revenue reach 36.8 billion yuan in the third quarter last year, a growth of 2.59 percent over the same period a year ago. It also has 7.2 billion yuan cash in hand. The robust financial situation puts it in a position to integrate group resources anytime it wants. Sinotrans Ltd. had already set up an e-commerce platform, Sinotrans Booking, last October.

The logistics industry has a bright future in China, and it appears to suffer minimum damage even during times of weaker economic growth.

According to Gao, logistics fee accounted for 18.1 percent of the gross domestic product in China in the past twelve months, which is much higher than in developed countries such as Japan and the US, where the figures are about 9.1 percent and 8.5 percent respectively.

Logistics fee in Greater China could see compound annual growth of 16.3 percent, the highest in the world, according to supply chain consultancy Armstrong & Associates.

– Contact the writer at [email protected]

RC

 

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