Kerry Logistics Network said net profit soared 71.5% to HKD1.83 billion in its first announcement after listing last year, with growth this year focused on the e-commerce business in China. Core net profit only increased 8.7% year-on-year to HKD886.4 million after removing one-off revaluation gains from investment properties and disposal gains from its warehouse. Turnover rose 3.5% to HKD20 billion. The logistics company said cross-border e-retailing will be a key focus given the huge e-commerce market in China. “Beijing wants to shore up the economy through domestic consumption and e-commerce could facilitate this goal,” said Edwardo Erni, Kerry Logistics’ Managing Director for mainland operations. Talks with the General Administration of Customs of China began nine months ago to reduce tariffs on products ordered through its e-commerce platform, said Erni. The platform will be based in Hangzhou. The e-commerce business only accounts for 10% of its revenue generated from the mainland now. Greater China accounted for 70% of its total revenue last year. But an Analyst from a Chinese investment bank said that “e-commerce was not the company’s dominating earnings contributor, and its major growth engine would be the integrated logistics business in China and Southeast Asia”. The company said it will endeavor to increase its warehouse facilities in Thailand and Vietnam. Kerry also added three logistic facilities in Chongqing, Wuxi and Xiamen last year. Integrated logistics operations posted an 11.5% growth in profit to HKD1.27 billion. The international freight forwarding unit saw its profit jump 9.4% to HKD328.5 million last year, the South China Morning Post reports.

China International Marine Containers (Group) Co (CIMC) will build a new container production base in Guangdong costing CNY7 billion. CIMC, the world’s largest container manufacturer by market share, is betting that a recovery in the global shipping market will boost demand for containers. Wholly-owned subsidiary CIMC Container Holdings has reached an agreement with the Fenggang county government of Dongguan city, Guangdong province, for the CIMC Fenggang logistics equipment manufacturing project. CIMC Container will initially invest CNY2.5 billion to acquire land and build infrastructure facilities, which are due to be completed by the end of next year. The remaining funds will mainly be spent on the construction of plants, the purchase of fixed assets, market promotion, and product research and development (R&D). Annual production capacity will reach 750,000 standard containers. CIMC’s revenue rose 1.2% to CNY41.19 billion between January and September last year. But its container business was affected by a declining global shipping market, with revenue falling 22% to CNY16.71 billion. More than 40 companies and 18 manufacturing bases carry out container production, sales and design work for CIMC throughout the world. The Chinese company produces a wide variety of containers, ranging from dry freight containers to refrigerated and special boxes, for domestic and global clients. It also offers logistics vehicles, tanker trailers and construction vehicles, and it designs and produces passenger boarding bridges and cargo-handling systems for airports, the China Daily reports.

China Merchants Group will take advantage of merger and acquisition (M&A) opportunities in China’s fragmented logistics and infrastructure sector as local governments deleverage, said company Chairman Fu Yuning. “There will be lots of mergers and acquisitions in the logistics industry in China as oversupply will lead to industry consolidation,” said Fu, who is also the Chairman of Hong Kong-listed China Merchants Holdings (International) and China Merchants Bank. There are over 100,000 logistics players in China but there is a lack of major players with advantages of scale. China Merchants’ logistics arm will expand its services to upstream and downstream customers, Fu said. Over the past 20 years, China Merchants has established a network to support nationwide sales outlets for brands like Tsingtao Beer, Coca-Cola and Procter & Gamble. It is now aiming to further develop supply chain services for manufacturers as well as last-mile delivery services, which have received a big boost because of the enormous growth of e-commerce. With the recent acquisition of a minority stake in SF Express, one of the major courier companies in China, China Merchants is seeking to leverage the e-commerce boom.

China’s Ministry of Commerce (MOFCOM) will promote the standardization of key logistics equipment and provide financial aid to companies whose costs rise because of the new standards, officials said. “In the next one to three years, we will introduce standards for some key equipment used in commercial logistics, such as pallets and bar codes,” said Wang Xuanqing, Deputy Director General of the Department of Circulation Industry Development at the Ministry of Commerce. In 2012, the logistics costs of companies in China reached CNY9.4 trillion, equivalent to about 18% of GDP, compared with the world average of 11.2%, according to Wang. The low threshold for entering the industry has drawn many small and medium-sized enterprises, which account for more than 90% of the business, leading to low efficiency. Weak use of information technology and various fees and taxes are also to blame. “The logistics sector is falling behind the economy’s development and the expansion of consumption. The problems of high costs and low efficiency are obvious,” said Hu Suojin, Deputy Director General of MOFCOM’s General Office. Minister Gao Hucheng said that logistics operations are fundamental to China’s economic growth.

Chinese logistics companies should use advanced technologies and better management to embrace new challenges in the industry, said Ma Zengrong, Director General of the China Logistics Technology Association. China’s logistics industry now accounts for some 7% of the nation’s GDP. It has been growing at an average annual rate of 20% over the past decade. According to statistics from the China Logistics Information Center, the industry registered year-on-year growth of 9.1% in the first eight months of this year, 0.6 percentage points lower than the same period last year. Though it showed a slight decline, compared to 2012 when growth dropped 3.8% in the period, the industry is making up ground this year, Ma said. He added that several factors are influencing the country’s logistics industry－overall economic development, market demand, technology, rising costs and pressure for environmental protection. As a result, China’s logistics industry will show several new trends. “The first trend is that the overall logistics industry will maintain good momentum,” Ma said. The second is that the industry will gradually be concentrated in the hands of a few leading enterprises that have competitive facilities, networks and management systems. With the rise of the information industry, Ma said electronic businesses will have a great impact on the logistics industry. “Information technology will make the whole logistics chain more intelligent, and the Internet of Things will have a big impact on the logistics industry,” said Ma, as reported by the China Daily.