Cargo Services Far East
Competition for the Big Guys
February 28, 2005
Kevin Lam, Asst. Managing Director
Gilbert Wong, Business Development Director
Cargo Services Far East (CSFE) has a core management group of five in Hong Kong. The company founder, John Lau, started the business in 1990 after experience with export buying and container operations. His key associates went to college in Canada and the U.K. They bring work experience from Maersk and airfreight forwarders.
CSFE handles about 120,000 TEUs per year as an NVOCC and 150,000 TEUs as a liner agent for smaller shipping lines. It handles 14,000 metric tonnes of airfreight. Airfreight has grown quickly since 1994.
There are 22 offices in China and Hong Kong. The company has key offices in Los Angles, Dubai, Karachi and Singapore. Warehousing and supply chain management are done in owned facilities in Hong Kong, Shanghai and Shenzhen. There is a 30,000 square foot bonded warehouse and more than 650,000 sq. ft. CFS/CY in Shanghai. There is another leased SCM operation in Singapore. The Hong Kong office is in the ATL Logistics complex at the Kwai Chung container port. Shanghai operations are in Pudong, Baoshan and Jiading.
CSFE has 100 trucks for distribution in Hong Kong, with 70 of them having the cross-border licenses to undertake jobs between Hong Kong and southern China. It also has 15 units of tractors in Shanghai. Lau and company provide a host of “buyer-like” services for supply chain customers. These services involve collection and handling of samples, handling of materials to the production facilities, tracking of production and freight forwarding services. While CSFE charges for these services, the costs are significantly less than typical buyer’s commissions of 6-7%.
CSFE uses a web-based inventory/transportation management system called ediTrack. CSFE customers using CSFE and ediTrack are Wal-Mart/ASDA, Woolworths Limited, Matalan, John Lewis, Rosebys Bed/Bath/Home and others.
As a regional freight forwarder, CSFE’s principal customers are Sodimac, Kohler, Towngas, Actona, William Levene, etc. It operates two brand names, Far East Cargo Line and Ocean Navigator Express (ONE) Line to give global coverage. The key internet tracking piece is CargoTrack for these services.
Other key pieces of information: Airfreight customers are FCUK, Lane Crawford, Espirit, Marc Jacobs, Swatch and others. Liner agencies are for ANL, Maruba, AAL, PAS and TOL. Cargo Cold Chain Logistics handles perishables and frozen product. CSFE does a fair amount of garment-on-hanger business.
Lau and his colleagues are planning an expansion in China over the next two years. 16 additional offices are planned, with an emphasis on the Yangtze (Changjiang) River basin.
CSFE strikes us as an aggressive, low cost competitor not afraid to take on the likes of DHL/Danzas. They hold all the necessary licenses from the People’s Republic of China, including a domestic logistics license. They are a major player in China now and should increase market share going forward.
Sources: A&A Primary Research, http://www.cargofe.com/