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.

The accelerating march of international retailers into Hong Kong is sparking strong demand for warehousing space, pushing occupancy rates at logistics centers to record levels, and rents almost back to the peaks of 2008. “Demand for warehouse and logistic centers in Hong Kong is driven primarily by the storage and distribution requirements of retailers, supported by the insatiable appetite of the mainland shopper,” Darren Benson, Senior Director of industrial and logistics services at property consultancy CB Richard Ellis Hong Kong, said. The resulting competition for warehousing and storage space between retailers as well as third-party logistics companies that provide such services has, in turn, pushed up rents. The Goodman Group, the biggest warehouse landlord in Hong Kong, is signing up tenants for its Interlink warehouse and distribution development in the Tsing Yi port district at HKD12 per square foot. Valued at more than HKD4 billion, Interlink is still under construction; when complete, it will provide 2.4 million square feet of space. Among its major competitors in the warehousing and logistics industry in Hong Kong are Kerry Properties, ATL Logistics and Mapletree Logistics. According to Benson, the most recent expansion in the sector saw international express delivery company TNT Express open a 100,000 sq ft specialist facility catering to the fashion industry within the ATL Logistics Center at Kwai Chung. Property consultancy CBRE said rents in the warehouse sector were almost back to their 2008 peak, with the average rent now HKD6.80 per square foot against HKD7 then. A&F, an international fashion space retailer, increased its warehouse space from 80,000 sq ft to 100,000 sq ft in ATL. Home furnishing group IKEA took up an additional 60,000 sq ft of space in ATL, and Spanish clothing and accessories retailer Zara leased 45,000 sq ft in the Texaco Center in Tsuen Wan.

Shanghai plans to increase the storage area for bulk commodities, including nonferrous metals, at bonded warehouses fourfold to 200,000 square meters amid efforts to develop a top bulk commodity trading center in the Asia-Pacific region at the Yangshan Free Trade Port. That is similar to the storage scale for bulk commodities in Singapore, according to the Shanghai Free-Trade Zones Administration. Yangshan and Waigaoqiao have become major distribution centers for nonferrous metals. About 70% of the country’s copper is imported through Shanghai ports. The zones’ import and export value of copper reached USD5.5 billion last year and hit USD4.2 billion in the first six months of this year. Attracted by preferential policies, 10 leading companies from the banking, trading and manufacturing industries launched the first batch of 10 bulk commodity firms at Yangshan earlier this month. Ten other companies will follow suit and register with the port soon.

The Zhongshan government plans to boost its tax revenue from the timber industry by setting up a logistics center with Hong Kong-listed Sustainable Forest Holdings, which will supply wood to businesses in the Guangdong region. The logistics center, named the Susfor-Oasis International Timber Trading Market, is located in the 3.5 hectare New Oasis Industry Zone in Zhongshan, in southern Guangdong. Sustainable Forest will be the sole operator and supplier for timber to local manufacturers and wholesalers, according to its CFO Sandy Fletcher. Xie Zhongfan, Vice Mayor of Zhongshan, likened the logistics center to a one-stop timber trading platform for wood users, and having all of them operating in the industrial zone would help boost tax revenue. Zhongshan and nearby Shunde are the largest wooden floor furniture production areas in China. Fletcher said the logistics center would help cut out trading companies in the middle, improving profit margins.

Agility Logistics plans to relocate its Asia-Pacific headquarters from Hong Kong to Singapore in June. The company, which is among the 10 largest logistics operators in the world, will transfer nine senior executives to Singapore. The company joins firms such as rival logistics giant Kuehne+Nagel, Swire, China Navigation and Clarksons, which have moved their headquarters or substantial operations to Singapore from Hong Kong over the past 18 months. Up to now, Hong Kong remained the key Asia-Pacific regional center for Agility Logistics, which has its global headquarters in Switzerland. It is a division of Agility Public Warehousing, a Kuwaiti company listed in Dubai. Sources close to Agility Logistics said that after two years of the Asia-Pacific regional operations being split between the two cities, it made sense to centralize the headquarters in one location. They said there were synergies to be achieved from having the heads of the air or ocean freight businesses being able to talk directly to the heads of other divisions in the same building.