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Tag: LF logistics

  • Global giants eye Vietnam e-commerce logistics market

    Global giants eye Vietnam e-commerce logistics market

    The world’s largest container shipping line Maersk and U.S. express delivery company FedEx are seeking to enter Vietnam’s e-commerce logistics market. Ditlev Blicher, regional managing director for Asia-Pacific, A.P. Moller – Maersk (Maersk), was in the country this week, three months after the Danish company spent US$3.6 billion on acquiring Hong Kong firm LF Logistics.

    He said with LF Logistics’ expertise in omnichannel orders, Maersk would have a better position in the global e-commerce market, including Vietnam. He said that his company plans to offer business-to-business (B2B) and business-to-consumer (B2C) delivery services.

    Hoan Dang, head of omnichannel order fulfillment at Maersk Vietnam and Cambodia, said with the acquisition of LF Logistics, his company could join hands with e-commerce platforms to handle goods orders in the Vietnamese market.

    FedEx is integrating its services with e-commerce platforms to enable online retailers to use them without leaving the platforms.

    Hardy Diec, managing director of FedEx Express Indochina, said e-commerce would continue to flourish in Vietnam.

    Earlier this month his company opened a new $2-million operations center in Hanoi’s Bac Tu Liem District. Vietnam will be one of the top 10 countries for FedEx in terms of trade volume growth over the next five years.

    Vietnam will achieve the highest growth in the digital economy in Southeast Asia between 2022 and 2025, a report by Google, Temasek and Bain & Company has forecast.

    Its digital gross merchandise volume is likely to reach $23 billion in 2022, and $32 billion by 2025.

    According to global firm Allied Market Research, Vietnam’s express delivery market is expected to be worth $4.88 billion by 2030 after growing at 24.1% annually, with the growth of e-commerce being one of the main drivers.

    Logistics firms are expanding their services and lowering prices.

    This month Lazada Logistics announced it would start offering omnichannel deliveries for online shops.

    J&T Express announced cuts of 10-20% in freight.

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  • Hong Kong-based LF Logistics now part of Maersk

    Hong Kong-based LF Logistics now part of Maersk

    Maersk completed its US$3.6b acquisition of LF Logistics in late August, taking control of the Hong Kong-based contract logistics company, which will now be rebranded to Maersk.

    Maersk will add 223 warehouses to the existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5 million square meters.

    LF Logistics, part of supply chain manager Li & Fung, employs 10,000 people, operates an extensive pan-Asia network and specializes in B2B and B2C distribution solutions within retail, wholesale, and e-commerce. It offers premium omnichannel fulfillment services, e-commerce, and inland transport in the Asia-Pacific region.

    As part of the transaction to acquire LF Logistics, Maersk has entered a strategic partnership with Li & Fung to develop a comprehensive range of end-to-end global supply chain services with Li & Fung focusing on the upstream supply chain and Maersk focusing on the downstream supply chain.

    “Historically, our focus has been on origin logistics or exports out of Asia, but now the region has transitioned into a large consumer market in its own right,” said Ditlev Blicher, Regional Managing Director of Asia Pacific at A.P. Moller – Maersk.

    Blicher noted that the combined team will provide strong omnichannel fulfillment capabilities that will enable exports into Asia and connect with the Asian consumer directly.” The parent company of Li & Fung will retain and continue to build its carved-out global freight management or GFM business.

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  • Singapore’s Temasek Takes Stake in LF Logistics

    Singapore’s Temasek Takes Stake in LF Logistics

    Temasek Holdings has invested US$300 million (S$406.1 million) for a a 21.7 per cent stake in Hong Kong-based global supply chain giant Li & Fung’s logistics business.

    The injection from Singapore’s state investment company wil value the business, LF Logistics, at approximately US$1.4 billion.

    Li & Fung said that as a result of Temasek’s investment, it will postpone a previous proposed spin-off initial public offering for LF Logistics. It will remain a controlling shareholder of LF Logistics with a 78.3 per cent stake.

    Proceeds from the investment will be used to fund LF Logistics’ future capital expenditures, business growth initiatives and to repay its existing bank loans.

    LF Logistics has achieved multiple-year double-digit organic growth, and is rapidly growing in Asean and expanding into new geographies including Japan, Korea and India, said Li & Fung.

    Temasek’s investment comes after an overall slower pace of global investments in the past year for the firm.

    “The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung’s capital structure and financial flexibility,” said Spencer Fung, Group CEO, Li & Fung.

    “Our strong operating cash flow and solid balance sheet provides us with ample liquidity to fund future growth and complete our transformation efforts, as we execute our three-year plan goal of creating the supply chain of the future.”

    Shares of Li & Fung, which suspended trade on Friday morning, jumped as much as 18.8 per cent to HK$1.45, the highest since April 23, on Friday afternoon in Hong Kong trading.

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  • Li & Fung announces investment of US$300 million by Temasek in LF Logistics

    Li & Fung announces investment of US$300 million by Temasek in LF Logistics

    Li & Fung Limited (“Li & Fung,” “the Group,” or “the Company;” SEHK: 494), the world’s leading supply chain solutions partner for consumer brands and retailers, today announced it has entered into a Subscription Agreement with Temasek, the Singapore-headquartered investment company  (“Temasek”), for a cash consideration of US$300 million for approximately 21.7% stake of its Logistics business (“LF Logistics”).

    The investment values LF Logistics at approximately US$1.4 billion on a post-money equity valuation basis. Upon completion, Li & Fung will remain a controlling shareholder of LF Logistics, which at a 78.3% stake equates to approximately HK$1 of the Company’s current share price. Proceeds from the investment will be used to fund future capital expenditures, repay existing bank facilities and accelerate business growth initiatives at LF Logistics. As a result of this investment, the proposed spin-off IPO will be postponed until further notice.

    LF Logistics has achieved multiple-year double-digit organic growth and it maintains strong momentum from multiple growth drivers, including robust growth in China, the e-logistics boom, accelerated development in ASEAN across all of its services, and its rapid expansion into new geographies including Japan, Korea and India.

    Josep Phi, Group President, Li & Fung said, “We expect the strong growth of LF Logistics to continue. With operations in all of Asia’s fastest growing cities, we are well positioned to capitalize on rising middle-class consumption and our early investment in e-logistics allows us to enjoy first-mover advantage. Our logistics strength combined with Li & Fung’s sourcing and new digital supply chain solutions represents a unique end-to-end offering that encompasses the entire value chain.”

    Spencer Fung, Group CEO, Li & Fung added, “The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung’s capital structure and financial flexibility. Our strong operating cash flow and solid balance sheet provides us with ample liquidity to fund future growth and complete our transformation efforts, as we execute our Three-Year Plan goal of creating the Supply Chain of the Future.”

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  • LF Logistics opens giant Singapore e-commerce facility

    LF Logistics opens giant Singapore e-commerce facility

    LF Logistics has opened a 1-million-square-foot logistics facility in Singapore, the largest automated and customs bonded distribution warehouse in the city state that will target surging e-commerce growth in Asia.

    The nine-story center is located in West Jurong and is the company’s largest distribution facility in Southeast Asia, able to store up to 130,000 pallets with a throughput of 550 pallets per hour, aimed at meeting the fast-changing needs of brands and retailers in the region.

    “Our logistics business has been a bright spot with double-digit growth,” said Spencer Fung, the CEO of Li & Fung group. He did not provide an investment amount.

    According to the recent Asia Pacific Online Retail Forecast, 2015 To 2020, total online retail revenue will nearly double in Asia Pacific from $733 billion in 2015 to $1.4 trillion in 2020, a compound annual growth rate of 14.3 percent over the next five years.

    The total online retail revenues in just five markets of Asia Pacific — China, India, Japan, South Korea and Australia — surpass the combined figure for online retail in the U.S. and Western Europe combined.

    Joseph Phi, president of LF Logistics, said cross-border trade was expected to rise even faster with the establishment of the Association of Southeast Asian Nations Economic Community and the pending Trans-Pacific Partnership.

    “Our new logistics facility is well positioned to serve Singapore, as well as the broader Asia region and beyond. We see this facility as a gateway to the world,” he said.

    Although China dominates the e-commerce headlines, Southeast Asia is one of the markets of the future, said Steven Li, director of strategic partnerships for Cainiao, the logistics platform of Chinese online giant Alibaba Group.

    “Alibaba merged with Lazada recently, the largest online marketplace in Southeast Asia, and we believe the e-commerce market in the Philippines, Indonesia and Thailand will explode in two or three years,” he said at the Cargo Facts Asia conference in Hong Kong.

    Following the opening of the LF Logistics facility, Beh Swan Gin, chairman of the Singapore Economic Development Board, also highlighted the potential of the region.

    “The burgeoning middle class in Southeast Asia will drive consumer demand for more sophisticated products and services,” he said. “This new LF Logistics facility in Singapore is well-placed to address this opportunity. It will also enable the company to harness Singapore’s strong base of supply chain expertise to build differentiating competencies in e-commerce and omni-channel logistics.”

    Singapore Post has been quick to jump on the e-commerce train, and over the past two years, the group has been ramping up its regional logistics capabilities with new or expanded facilities, including the development of a $145 million fully integrated regional e-commerce logistics hub in Singapore that is expected to start operating in mid-2016. SingPost currently has more than 20 warehousing and fulfilment centers in the region.

    Alibaba Group has invested more than $200 million in a partnership with SingPost through a series of initiatives aimed at expanding its e-commerce logistics platform across Asia-Pacific. Alibaba increased its equity stake in the group to 14.51 percent.

    In a second initiative, Alibaba last year acquired a 34 percent stake in SingPost subsidiary Quantium Solutions International for $68 million, with SingPost holding the majority 66 percent share. QSI is a provider of end-to-end e-commerce logistics, warehouse and fulfilment services in Asia Pacific with a network spanning 10 countries.

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