Japan’s distribution centers are rebounding from record-high vacancies

Japan’s distribution centers are rebounding from record-high vacancies two years ago amid demand for modern storage after the March 11 earthquake and tsunami destroyed industrial spaces, drawing investors looking for returns amid a slump in the office market.

Investment in logistics may surge to more than 2 trillion yen ($26 billion) this year from almost zero in 2002, according to CB Richard Ellis Group Inc. Global Logistic Properties Ltd., the biggest owner of Japanese industrial properties, started exclusive talks in July to buy about 20 properties from LaSalle Investment Management Inc., two people with direct knowledge of the deal said then, outbidding Mitsubishi Corp. and Blackstone Group LP. Mitsubishi Estate Co., Japan’s largest developer by market value, entered the industrial market for the first time in April with a Tokyo Bay logistics center it’s building with Mitsui & Co., the nation’s second-largest trading house. Mitsui Fudosan Co., Japan’s biggest developer by sales, said on Sept. 8 it may start investing in storage and distribution centers in the country for the first time.

The vacancy rate for warehouses fell to 7 percent in June from a peak of 20 percent in September 2009. The shortage of new logistics centers and warehouses may lift effective rents, or the amount tenants pay property owners, by as much as 10 percent over the next six to 12 months, Yamada of Prologis said. Industrial rents in Tokyo are the most expensive in the world, followed by London and Singapore, according to CB Richard Ellis. Annual average warehouse rental in Tokyo was $22.15 per square foot in the first quarter.

Indian railways need radical change to make it a vital logistics component

Reforms are needed on multiple fronts to modernise the railways and make it play its role in globalising India’s transport infrastructure.

One, the IR should spend more on safety. It must procure new rolling stock and invest in track renewal, electrification and electronic signalling, especially for high-speed operations. However, investment is a function of railway finances. The IR’s deteriorating financial health, reflected in its operating ratio, can improve only if it raises passenger fares. The practice of freight and upper-class passengers subsidising lower-class fares should end. Even railway unions today want a fare increase, fearing that the IR could go the Air India way.

Two, the IR also needs to break new ground in freight. Keeping freight rates untouched will not fetch the IR a larger share in goods movement. Three, it should involve the private sector in a big way to augment investment and step up freight volume and revenue. Private entrepreneurship must be roped in for projects including modernising stations and freight terminals.

Sinotrans and Keppel Logistics Partner on Wuhu Port

Sinotrans announced recently that it will cooperate with Keppel Logistics to develop and construct a container and bulk goods terminal in Wuhu city, Anhui province, in China.

Sinotrans and Keppel Logistics will respectively inject 134 million yuan and 140 million yuan into Sinotrans’ subsidiary, Wuhu Sanshan Port.

Sinotrans and Keppel will each hold 50-percent stakes in Wuhu Sanshan Port, which will build and operate the container and bulk goods terminal in Wuhu.

Logistics industry faces challenges to integration in Vietnam

Domestic logistics companies have only a year to meet commitments to integrate into global transport services.

A report from the Ministry of Industry and Trade states that about 60 per cent of the country’s commercial value is from logistics services, which make up between 15-20 per cent of GDP.

The Vietnamese logistics industry has attracted a number of foreign investors and there are currently close to 1,000 companies that have been established in the country. These firms have under performed in the domestic market and in the international market, according to the report.

The Viet Nam Freight Forwarders Association (Viffas) says the Vietnamese logistics services have not yet fulfilled their potential. The association says only 10 per cent of companies truly provide logistics services and the remainder just work for foreign companies, adding that a lack of transparency has impacted on competition.

According to Viffas, Vietnamese companies are only able to supply simple logistics services. Marketing abilities are also noted as weak, lacking professionalism, the association says. Due to these shortcomings, about 70 per cent of the market share was captured by foreign companies. This figure may increase when the commitments to the World Trade Organisation to open the market to foreign transport service companies comes into effect in 2014, and similar commitments to ASEAN are instated in 2013.

Dont overreact for every situation….

A man standing on the floor and looking aimlessly. CEO of that factory came and asked his salary…. Man replied 5000 sir…. CEO took out his wallet and gave 15000 and told him “I pay people here to work and not to waste time….This is ur 3 months salary. Now get out of here. Never come back”…. That guy left. Then CEO asked workers “who was that guy?”…. workers replied “courier boy sir………..”

Moral: Dont overreact for every situation….

McDonalds to Add 700 Stores in China by 2013

McDonalds’ plan to add more than 700 restaurants in China by 2013 signals the growing market for cold chain logistics providers.

With the new restaurants, McDonalds' network of 2,000 restaurants in China will still pale in comparison to KFC's 3,200 outlets within the country, but the strong expansion will put new demand on distribution channels from gateways to domestic networks.

"There is no doubt that the reefer import market is growing,” said Eric Eng, vice president at APL. “The middle income group in China is growing, and their disposable income is getting higher and higher.”

Although only a small amount of what should be fully refrigerated moves through the cold chain with correct temperature maintained, the Chinese government’s new five-year plan calls for an expansion of the reefer services, said Troy Shortell, senior vice president for Greater China at Havi Logistics. The German logistics provider orders and owns McDonalds' inventory before it is delivered to the fast food giant.

China’s is the third-largest cold storage market in the world with 61 million cubic meters of capacity, according to the 2010 Global Cold Storage Capacity Report published by the International Association of Refrigerated Warehouses.

Kleiner Perkins And Warburg Pincus Put $100M Into Chinese Luxury Shopping Site Xiu.com

Kleiner Perkins China (KPCB China) and private equity firm Warburg Pincus have put $100 million in Chinese online retailer Xiu.com. The company just raised $20 million from Kleiner earlier this year. Xiu.com was founded in March 2008 and offers middle-to-luxury brand name fashion products - clothing, shoes, bags, accessories, cosmetics and home decor - to China’s middle class. The company boasts 10 buyer offices in New York, Los Angeles, Miami, Australia, Paris, London, Italy, Korea, Hong Kong and Japan. Bloomberg reports that Xiu is expected to quadruple sales to more than 1 billion yuan ($156.6 million) this year. Ji Wenhong, founder and CEO of Xiu.com, said in a statement that the company will use the new funding to source inventory from global brands, add more talent, and enhance logistics capacities. The company says that this funding round marks the largest Series B round raised among Chinese e-commerce industry in history. A spokesman from Warburg Pincus said the ‘the soaring purchasing power and China’s consumption upgrade’ make the firm ‘very confident about Xiu.com’s future.’ Warburg Pincus also said that it plans to further expand its investment in Xiu.com, based on the market and company development.