Shenzhen Kaitong Logistics Co., Ltd.
Shenzhen, China Site Visit
July 21, 2016
Mr. Yang Jiyong, General Manager
Mr. Zuo Jianhua, Station Manager
Shenzhen Kaitong Logistics Co., Ltd. was founded in 1998 and started logistics in Huizhou, Guangdong province to serve the Daya Bay Nuclear Power Plant. In 2000, Kaitong Logistics moved its headquarters to Shenzhen to develop business and customers in the market. Today, Kaitong Logistics has 16 branch offices in China mainland and more than 1,000 employees.
Kaitong Logistics has a strong network and warehousing facilities in China. It runs 450,000 square meters of warehouse space. In order to meet customers’ requirements, Kaitong Logistics rents temporary warehouses from subcontractors and has seven subsidiaries to manage these warehouses. The main cities served are Shenzhen, Guangzhou and Dongguan. Kaitong Logistics has good experience in VMI (vendor-managed inventory) and JIT (just-in-time) delivery to link the manufacturers and their suppliers. This means Kaitong Logistics can provide more value-added services to its customers than standard warehouse managers.
Kaitong Logistics has its own trucks for truckload transportation and also uses trucks managed by subcontractors in peak season. For less-than-truckload shipments, Kaitong Logistics will have to use a local co-loader’s service.
Since 2006, Kaitong Logistics has been HUAWEI Technology’s leading logistics service provider for inland transportation and warehousing. HUAWEI is very well-known in China which helped Kaitong Logistics build a good reputation in the telecom industry in China. ZTE Corp. and BYD also use Kaitong Logistics as a logistics partner for inland transportation. 2006 to 2013 was a rapid growth period for China telecom. HUAWEI and ZTE also experienced strong growth during this period. In turn, Kaitong Logistics also achieved good growth in revenue. However, since 2013, the business from HUAWEI and ZTE has slowed down. In order to protect its profit margin, Kaitong Logistics had to reduce its cooperation with both HUAWEI and ZTE but its business with BYD is still ongoing.
Kaitong Logistics is developing oversized and overload transportation project logistics business. For example, Kaitong Logistics has handled Roving Exhibitions for HUAWEI, elevator and boarding bridges for ThyssenKrupp, as well as electric and wind power equipment. Kaitong Logistics can generate a high profit margin from this kind of professional experience. Its record is RMB 40 million from 30 shipments of wind power equipment.
Kaitong Logistics had a good opportunity to be a top logistics provider in the past years, but missed the opportunity because of critical competition. Although Kaitong Logistics has a good profit margin for project logistics, it needs to find the advantage and value of its warehouse network so it can generate recognized gross revenue.
Sources: A&A Primary Research, http://www.kt56.cn/index