China National Cotton Group has set up North China’s largest cotton storage base in Weifang city, Shandong province. Warehouses at the base have a total storage capacity of 100,000 metric tons and to date have stored more than 20,000 tons of the state’s reserve cotton. Officials said the base is expected to raise its commodity handling capacity as high as 500,000 tons, making it the largest cotton storage base in China.

The rapid growth of the e-commerce sector in China has triggered demand for quality logistics space, with demand often outstripping supply, according to  a recent market report from real estate service provider DTZ. China is set to overtake the United States as the largest e-commerce market in the world by 2015, but e-commerce companies will need to find ways to make more efficient deliveries to the more than 220 million online shoppers in China. Limited infrastructure, lack of warehouse space and the shortage of last-mile delivery expertise often makes it difficult for e-commerce companies to provide efficient services in lower-tier cities and inland areas. For investors and developers, the scarcity of suitable land is also an issue. Investors should consider investing in large companies with existing land banks, or in those that are redeveloping old facilities, the report said. The booming e-commerce market has also transformed the supply chain from being supply-driven to demand-led. This has important ramifications for logistics property in terms of site selection, specification and location. “We see a growing need for the development of small warehouses adjacent to the city markets,” said David Ji at DTZ. Modern logistics facilities account for just 2% of the total stock in China, meaning that the majority of property comprises middle- and low-end premises, mostly converted from factories and poorly constructed facilities, with inadequate height, insufficient loading docks and restricted vehicle accessibility. The lack of supply has also contributed to higher rentals in first tier markets, with logistics rents going up by 85% in some districts of Shanghai during the past year. The higher rentals have prompted many e-commerce companies to relocate their warehouses to lower cost regions, the DTZ report said. “Over 30 million new Chinese consumers — the equivalent of the population of Canada — are expected to make online purchases every year until 2015,” said Ji, as reported in the China Daily.

Hong Kong’s largest gold-storage facility, which can hold about 225 of the bullion now in the U.S. depository in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global. The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 tons, said Joshua Rotbart, General Manager for the company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelery, fine art and precious metals. “Hong Kong is a very important center for gold, especially because it acts as a doorway to China,” said Sunil Kashyap, Manager of Asia-Pacific Foreign Exchange and Precious Metals at Scotiabank. “Current international hubs are in New York, Zurich and London. There’s still a need to set up an Asian hub for physical gold.” Gold demand in China may rise 13% to 870 tons this year, according to a revised forecast from the World Gold Council (WGC).

Rentals of bonded warehouse space in Jiangsu ― Suzhou and Kunshan in particular ― continued to climb during the first quarter though those in Shanghai remained the highest. Currently, the average rental in Jiangsu is about 25% lower than in Shanghai, which could help explain why some tenants chose to relocate out of the city’s Waigaoqiao bonded area and moved into similar facilities in Jiangsu. For non-bonded warehouses, rents vary significantly in Shanghai, Jiangsu and Zhejiang. The average rental in Shanghai continued to top the chart due to the relatively high cost of land acquisition and the willingness of the market to accept a higher charge for prime warehouse space. In the first quarter, the overall warehouse vacancy rate in Shanghai remained at 4.5%, a very healthy level. However, the vacancy rate in Jiangsu stood at a high of 14% due to a large volume of non-bonded warehouse stock yet to be absorbed. Apart from Kunshan, take-up strength in a large part of the province seemed subdued, with no major transactions concluded. In contrast, limited supply accompanied by buoyant take-up activity in Zhejiang bought the vacancy level there to a new low of 1.7%. In Shanghai, overall vacant warehouse space, both bonded and non-bonded facilities, totaled 569,494 square meters at the end of March. According to DTZ’s industrial logistics survey, Shanghai’s future prime non-bonded warehouse space will mainly arise from major developers such as Vailog, Goodman and Prologis. Land inventory held by Vailog and Prologis is relatively dispersed in terms of locality, while Goodman’s land stock is mainly clustered around Pudong International Airport. The total leasable area from Goodman’s airport project is planned to reach 192,588 sq m. This, together with GLP’s Pudong Airport Logistics Park and Heqing Logistics Park, could increase the total future leasable area in the Pudong airport area to 466,599 sq m ― thus making it the third largest logistic center in the city after the Waigaoqiao and Lingang areas, the Shanghai Daily reports.

International cold storage experts see China as a market where the industry can offset sluggish revenues in developed countries. PFS YIDA Logistics (HK) Group Co, a joint venture between the U.S.-based Preferred Freezer Services (PFS) and Yida Group, is venturing into China’s cold storage market. PFS owns a 60% stake in PFS YIDA Logistics (HK) Group Co, while the Dalian-based Yida Group holds the other 40%. The venture is opening its first cold storage facility, which has a capacity of 40,000 tons, in Shanghai. The facility “is a first small step to what will be a national network of world-class refrigerated food-handling facilities,” said John Galiher, President and CEO of PFS, at the opening ceremony of the facility. Building the network will take years and cost more than CNY7 billion. The second facility, which has a storage volume of up to 30,000 tons, will open in the Waigaoqiao area of Shanghai in February. The company also broke ground on a 30,000-ton facility in Tianjin on November 28 and is set to start work on a facility in Shenzhen, according to Tim McLellan, the company’s Managing Director of International Business. After reading domestic media reports about contaminated quick-frozen dumplings, “we came to the conclusion that quality control along the whole cold chain is very important for food safety”, said Yuan Yi, General Manager of Jimbob (Shanghai) Logistics Co, a logistics and cold chain consulting company. The central government has identified three mega-economic zones: the Bohai Bay, the Yangtze River Delta and the Pearl River Delta. McLellan said the company will establish facilities in all three regions, but it will also “follow the market” as inland areas develop. Jiang Liqiang, Operations Director of the Quality Control Center at RCS Group, said it was very hard to find a high-standard cold storage facility in China. “The participation of companies like PFS in China will greatly improve the industry’s standards and service,” said Jiang. Liu Xianfeng, Distribution and Cold Storage Manager of McCain Foods (Harbin) Co said that although a lot of investment was going into cold storage, only a few facilities could achieve strict temperature controls. The existing cold storage volume could only satisfy 20% to 30% of the market demand, a situation that results in about USD9.25 billion of losses during farm product transportation, the China Daily reports.