YRC expands logistics presence in China, plans to acquire Shanghai Jiayu Logistics Limited
Jeff Berman, Senior Editor -- Logistics Management, 6/29/2007
SHANGHAI—In an effort to further develop its logistics presence in China, less-than-truckload (LTL) transportation services provider YRC Worldwide Inc. said earlier this week it has entered into a preliminary agreement to acquire Shanghai Jiayu Logistics Limited, a China-based provider of LTL ground transportation services.
Shanghai Jiayu Logistics Limited has more than 30,000 customers, 1,600 employees, 300 tractors, and a 3,000 vehicle network.
Bill Zollars, YRC president and CEO, said in a statement that this acquisition will allow the company to build a service network that will provide greater flexibility for shippers moving freight for intra-China movements and also provide seamless, end-to-end service for international movement in the critical U.S.-China trade lane.
Zollars added that YRC’s existing freight forwarding and logistics joint ventures are what has driven this China expansion strategy, and he said that this acquisition will advance this initiative by expanding the company’s scale and capabilities in China.
This announcement accurately reflects what YRC predicted it would do—in terms of making further inroads into China.
Jim Ritchie, president and CEO of YRC subsidiary YRC Logistics, which was re-named from its original name—Meridian IQ—earlier this week, told Logistics Management in a March interview that from a ground-transportation standpoint, the environment in China continues to be very limited.
And because of this limited—and highly fragmented—transportation network, foreign transportation services providers are taking different approaches when contemplating how to best set up shop in China.
“What has happened in the last [15] months is that strategies are starting to form on how to develop cooperative agreements with [Chinese] transportation providers to create more synergy in the supply chain,” said Ritchie. “By linking together the same service providers along different segments of the supply chain, we are starting to get better dependability and visibility.”
YRC Logistics offers shippers logistics and freight forwarding services in China. It has roughly 70 trucks on the road in China. And it works with 39 Chinese transportation companies and provides inland transportation services for approximately 200 shippers. And its global operations are comprised of 170 offices in 76 countries in Asia, North America, South America, and Europe.
Ritchie also noted that the logistics footprint in China continues to grow, with logistics becoming more of a priority for the Chinese government. This is evidenced by the Chinese government’s most recent five-year plan, which allocates $17.5 billion towards the construction of airports between 2005-2010, including 71 airport expansion projects and building 49 new ones. And also under this five-year plan, the Chinese government expects to spend $20 billion on upgrading the country’s highway and railway system.
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