Kerry Logistics has won a distribution deal with British premium store group House of Fraser to support the retailer’s store and e-commerce expansion into China through the course of 2016 as it invests in its international network and new services.
Hong Kong-based Kerry Logistics will operate more than 9,000 sqm of warehousing for the UK group in Shanghai, providing import agency services, import customs brokerage, and domestic distribution and e-fulfillment. Value-added services will range from re-conditioning of consumer returns to product localisation.
House of Fraser, acquired by Nanjing Cenbest last year, is set to open stores across China, with the first three in Nanjing, Chongqing, and Xuzhou, as well as launching a Chinese sales portal.
“We are extremely pleased to be partnering with Kerry Logistics for our China distribution services, for both our stores and online proposition,” Tony Carr, Executive Director, Supply Chain and International, House of Fraser. “Their expertise and local knowledge will be invaluable as we establish a presence in the region and bring our premium shopping experience to the consumers in China.”
The deal follows a recent strategic agreement between Kerry and China Railway, under which the freight group will use the Chinese rail network, China Railway will benefit from Kerry’s international logistics network and the two partners will seek joint growth opportunities.
The Hong Kong-based company is currently investing in its network after improving profits in 2014. Kerry Logistics increased turnover by 6% to HK$21.1 billion, improved its core operating profit by 14% to HK$1.6 billion and increased the core net profit by 10% to HK$976 million. The Integrated Logistics (“IL”) business achieved a 12% increase in segment profit to HK$1.4 billion while the International Freight Forwarding (“IFF”) business recorded an 11% increase in segment profit to HK$378 million.
William MA, Group Managing Director of Kerry Logistics, said: “2014 was a year of consolidation and integration for Kerry Logistics. Through organic growth, investments and strategic acquisitions, we continued to expand our operating scale, strengthen our service capabilities and extend our network coverage during the year. Resources were deployed to integrate newly acquired businesses into our existing network and system, enhancing service offerings and increasing efficiencies. These efforts produced double-digit growth in both our core operating profit and core net profit, as well as improved margins in all our business segments.”
Kerry Logistics expanded its network in mainland China last year with two new logistics centres in Zhengzhou and Kunshan, commenced construction of two other facilities in Chengdu and Xi’an, and purchased a large site in Shanghai for a new flagship facility of 1.1 million square feet to cope with the expansion of its IL business in the city. Upon completion, this will be the group’s largest logistics facility in mainland China.
In Thailand, the group completed Phase 2 of the new logistics centre in Rayong and is constructing Phase 1 of the Kerry Bangna Logistics Centre which will serve as a new sorting centre for Kerry Express and a fulfilment centre for e-commerce customers upon completion. In addition, the group added a new warehouse and a new Inland Container Depot in Kerry Siam Seaport and in Cambodia is planning to construct a 160,000 square feet bonded warehouse on its newly acquired land at a Free Trade and Special Economic Zone in 2015.
Riding on the success of the fast-growing Kerry Express (Thailand), the group said it took further steps to build an ASEAN-wide regional express platform through acquiring a local express company in Cambodia and expanding the business into Singapore, Malaysia, Indonesia and the Philippines. To strengthen its ASEAN-wide cross-border road transportation network, Kerry Logistics took full control of the KART business in Malaysia and Thailand, further integrating the operations in the two countries into its KART network. The group also formed a new joint venture with shareholders of PT Puninar Saranaraya, one of Indonesia’s largest logistics companies, in March 2015 for growth of IL business in Indonesia.
In Hong Kong, the group launched Kerry Pharma to tap into the ever-growing pharmaceutical and healthcare market by setting up a brand-new GMP compliant secondary packaging facility and obtaining the WHO GDP certificate for the provision of warehousing, distribution and secondary packaging services for pharmaceutical products. It also expanded into the automotive sector in Hong Kong and was appointed to provide parts logistics services to several internationally renowned automotive brands. Across the Taiwan Strait, the group has built a service network supported by ten service hubs that covers the whole island.
George YEO, Chairman of Kerry Logistics, commented: “The integration of China’s economy with its neighbours is a major trend seen by the increasing intra-Asian trade and growing cross-border logistics. The combined economy in the region is becoming the central growth pole in the world. With our unique position as ‘Asia Specialist, China Focus, Global Network’, we aspire to be a major logistics provider for the new Silk Road.
“We will continue to grow our IL and IFF businesses through continuous improvements in operating efficiencies, service offerings, network coverage, and securing suitable acquisition opportunities in target markets. Our extensive exposure in the region and a broader international customer base will enable us to ride economic cycles and sustain long-term growth to reward our shareholders,” he added.
