FEaTuRE Logistics
distance,” said Peng. tation market continues to have a “highly no plan to lift the entry level of the logis-
Peng’s words were shared by another lo- scattered market.” For instance, the top 10 tics sector, and we will let market competi-
gistics operator surnamed Wang, whose shop logistics companies have less than 3% of the tion decide who survives,” said He Dengcai,
is across the street. Wang said the price war market share. For carload freight, the main deputy secretary general of China Federation
is still serious even among the smaller-time leaders are China Merchants Logistics with of Logistics & Purchasing, at a Zhengzhou
rivals, because “the boss always has his say a 0.6% of the market share, China Post Lo- logistics meeting.
on pricing.” gistics with 0.4%, and Sinotrans Group also One company feeling extremely confident
with 0.4%. in these uncertain times is Hoau Group, the
‘Scattered market’ Goh attributes the decentralized market wholly-owned subsidiary of TNT in China,
However, prices aren’t the only factor in to its low threshold of entrance because op- which recently announced its domestic in-
the competition. Service and transportation erators may start up their businesses without vestment plan to add 437 trucks and hun-
lines are also important. In the past eight setting up any comprehensive network or dreds of employees. Its third-quarter fiscal
years, Peng has opened about 50 lines cover- mastering any professional sales methods. report saw a revenue income increase of
ing Henan, Hebei and Shandong provinces. Price wars and the different levels of opera- 19.4% compared with the same period last
That compares to the more than 600 cities tors are also contributing factors, she said. year. “I expect double-digit growth in rev-
in China that TNT-Hoau has served over the TNT-Hoau’s CEO Xu agreed and said the enue and plan to build 12 additional distri-
recent 14 years. “We have about 20 trucks, low level logistics companies make up most bution centers around the nation next year,”
and sometimes we are short because they of the market. said Xu.
may be all used up,” said Peng. “However, we As for small players like Peng, they will
can not afford to buy new ones,” Invisible hand continue to concentrate on local markets
Peng added that their profit is around 10%, As for the future of the logistics market and advantages. “We only want to do our
or about RMB1000 ($146.46) per RMB10,000 in China, the government still believes in a own business and improve our service,” said
($1464.62) worth of business, and “the cost hands-off approach that lets the market de- Peng. “We will not die.”
is increasing as oil prices soar.” termine the future of all companies great
According to Goh, China’s road transpor- or small. “Currently, the government has
www.supplychains.com MARCH/APRIL 2010 45
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