The document provides an August 2009 edition of Logex Line, which summarizes news and developments in the logistics and transportation industries in India and globally. Domestically, the Indian government and railways announced plans to invest over $12 billion to develop ports and rail infrastructure. Several global and domestic logistics and transportation companies also announced expansion plans in India. Internationally, companies like Fedex and Schenker Rail planned expansions based on optimistic long-term views of the global economy. The document also highlights the long-term growth opportunity in containerized rail haulage in India and discusses various drivers that could increase rail's market share relative to roads.

1. August 2009
Logex Line
Contents
From the Ernst & Young desk................................................................ 02
In focus: ............................................................................................. 03
containerized rail haulage
India sector news................................................................................. 08
Policy and infrastructure
Company buzz
Market watch
International sector news..................................................................... 14
Logistics and deals............................................................................... 16
International deals
India deals
References.......................................................................................... 18

2. From Ernst & Young’s desk 1
Welcome to the August edition of Logex Line
On the domestic front, the Ministry of Shipping and the Indian Railways have made
various announcements relating to infrastructure development in ports and rail
sectors in India, fueling optimism in the logistics industry. Global logistics players
such as DHL, Universal Success Enterprise and domestic players such as All
Cargo Global Logistics, Container Corporation of India, Pratibha Shipping and
Poompuhar Shipping have all announced their expansion plans.
On the global front, players such as Fedex, Sino-Global Shipping, ProLogis and
Schenker Rail have announced their expansion plans, based on their optimistic
long-term view of the global economy.
We have highlighted the long-term growth opportunity in the containerized
rail haulage segment under the “In focus” section of this issue.
This month, the Logex and the Sensex have both gone up by 8%.
We hope you find this edition interesting and informative. We welcome
your feedback on it. Please write to us for any further information or to
add people to our mailing list.

3. In focus 2
Containerized rail haulage
Introduction • According to various estimates, India’s EXIM container traffic
is set to reach >22m TEU by FY16, led by rising foreign trade
In spite of being cost-effective, the share of the railways in the and containerization.
overall cargo and containerized cargo traffic in the country
has remained low due to longer lead and turnaround time,
EXIM traffic break-up reveals potential for increasing
infrastructure bottlenecks, the congested rail network and
containerisation (USD million)
the railways’ preference for passenger trains. However, this
scenario is expected to change due to various drivers such as: Exports FY04 FY08 CAGR Potential
ex-oil FY08/04 containerisation
• Long-term opportunity due to revival in trade
(%) (%)
• Potential from increasing container traffic
Agri & allied 7,328 16,210 22 90
• Likelihood of domestic container traffic improving products
• Railways to regain market share from roads Ores & 2,369 9,124 40 20
• Strategic shift in the focus of Indian Railways minerals
• Dedicated freight corridor to unleash the rail potential Leather 2,163 3,504 13 100
• NMDP aiming to double port capacity by FY12 goods
Gems & 10,573 19,688 17 NA
Long-term opportunity due to revival in trade jewellery
• Historically, India’s foreign trade has grown at 2.5x GDP Sports 99 134 8 100
and the correlation of its cargo traffic with its GDP is just goods
above unity. Chemicals 9,960 22,358 22 25
• However, globally and in India, rising containerization has Capital 12,406 37,371 32 100
outpaced the growth of normal cargo traffic. Further, India’s goods
level of containerization is less than 25%, which is well below
Textiles 13,495 22,138 13 100
the global average of 60–70%.
Unclassified 1,881 4,079 21 25
Growth in containerized cargo
Total 60,275 134,607 188 66
700 23% 25% Imports ex-oil
600 20%
Gems & 8,690 32,480 39 NA
500 16% jewellery
15% 15%
% of total cargo
14% 14%
13% 15% Machinery 7,129 7,980 3 75
Million tons
400 12%
300 460 640 Project 9,304 45,197 48 75
10%
370 goods
200 320 340
147
290 300 310 5% Other bulk 396 1,294 34 25
100 46 50 58 73
32 36 40 imports
0 0%
2001 2002 2003 2004 2005 2006 2007 2012E Others 32,062 84,927 28 60
Total 57,580 171,879 152 175
Major port traffic (Million tons) Containerized cargo (%)
Containerized cargo (Million tons)
Source: Secondary sources
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4. Growth in container rail haulage Likelihood of domestic container
45%
traffic improving
16
14
40% 40% • Empirically, rapidly developing countries such as India exhibit
35% transport elasticity exceeding unity. Historically, the elasticity
% of container cargo
12 32% 31%
30% 30% 30% of rail freight to the country’s GDP has ranged from 0.6 to
Million TEUs
10 33%
31% 31% 25% 0.75 (except during the 10th Plan).
14.2
8
5.44 20% • This is primarily because containerization of cargo is as low as
6 4.74 5.6
3.36
3.9 4.23 15% <5% in the domestic sector. However, the increasing market
4 2.47 2.88
1.55 1.71
10% share of the organized sector in retail is likely to increase
2 1.37
0.75 0.9 1 1.2 5% containerization of domestic cargo. Further, on a targeted GDP
0 0% of 7% for the 11th Five Year Plan, we believe that domestic
2001 2002 2003 2004 2005 2006 2007 2014E
container traffic will reach 2x GDP.
Total container traffic Railways share (%)
Domestic container rail traffic is still small as
Rail container traffic
compared to EXIM
Source: Secondary sources
4000
3500
Potential from increasing container traffic
3000
• Although key container cargo such as capital/project goods, 2500
000 TEUs
machinery and other cargo have grown at a fast pace, overall 2000
container traffic growth has been rather low In india. 1500
• Due to the various advantages of containerizing cargo, e.g., 1000
cost economics, easy handling, less damages, fast turnaround 500
time and multi-modal transport options, containerization is 0
slated to grow in the future.
FY09E
FY10E
FY12E
FY03
FY11E
FY04
FY05
FY08
FY06
FY07
• This will be due to more cargo being containerized, and its
penetration is likely to see a significant increase as ports and
inter-modal infrastructure improve. Total EXIM rail traffic
• Based on the potential containerization of individual items, Total domestic rail traffic
overall containerization is forecasted to be 50–60% of India’s
Source: Secondary sources
EXIM trade in the next four to five years, which is almost twice
the current rate of containerization at 25%.

5. Railways to regain market share from roads • Lack of last-mile connectivity with rail transporters
• For long-haul transportation, rail is a less expensive option • Flexibility provided by road transport operators
than road transport. However, even with the cost differential • Inefficiencies associated with the current monopoly of rail
being as high as 2-3x, road transport has garnered the bulk of haulage providers, delays, etc.
the traffic in the country. We believe that the share of rail has
The share of the railways is projected to increase in the
lagged behind road transport due to the following:
transportation pie from 17% in FY07 to 23% at the end of the
11th Five Year Plan by FY12.
Rail-linked logistics sector to drive growth
2001-02 2006-07 2011-12
1% 1% 2%
8% 7% 10%
3% 2%
4% 2%
4%
3%
17% 23%
19%
65% 69% 60%
Road Rail Sea
Air Services Storage
Source: CSO
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6. Strategic shift in the focus of Indian Railways Dedicated freight corridor to unleash the
• Indian Railways’ strategy of improving its efficiency and rail potential
performance has helped it show an impressive turnaround • Setting up of dedicated freight corridors (DFCs) would unravel
over the last few years. It is set to regain some of its lost the potential of rail and significantly accelerate its growth after
market share on the back of the following initiatives: 2014, when DFCs are expected to become operational.
• Improved capacity and productivity: • DFCs will have various advantages over the current system and
• There has been an increase in axle load from 20.3 tonnes are expected to achieve the following:
in FY07 to 22.9 tonnes over FY08 and a reduction in • Reduce delays (Exclusive tracks will ensure that
turnaround time from seven days in FY03 to around goods traffic is not affected by the movement of
five days in FY08 in its generated incremental freight- passenger trains.)
loading capacity.
• Enhance the carrying capacity of trains (The increase in
• Freight rate reforms: the axle load will raise the carrying capacity per train.)
• The tariff structure has been changed from a fixed to a • Lower turnaround time (This can be accomplished
market-driven tariff policy, which is linked to seasonality by using superior rolling stock and advanced
and price elasticity of demand. These initiatives have signaling systems).
helped to increase the volume of key commodities.
• Value-added services beyond transportation:
• To improve its market share, Indian Railways has
attempted to transform itself from a pure transport
provider to a service- oriented logistic solution provider.
• It has tried to do this by providing warehousing and cold
storage facilities, and increasing freight terminals and
containerization.
• It is also looking at setting up logistics hubs through
public-private partnerships (PPP) near or along side
important railheads.
• Share of rail to improve with entry of private players
• With the entry of private players in the rail haulage
business in 2007, the share of railways is likely to
improve since they are expected to provide last-mile
connectivity, better service and quicker turnaround
at terminals.
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7. NMDP aiming to double port capacity by FY12 Investment and development of major ports under the 11th Five Year Plan
• The National Maritime Development Programme (NMDP) Capacity (million tons) NMDP
launched an investment plan of INR1,003 billion in 2005, Major ports FY05A FY07A FY09E FY12E No of (INR
which covered 387 projects that are to be implemented projects billion)
by FY12. Kolkata (incl 43 55 54 95 40 65
• The program, which includes ports, inland waterway transport Haldia)
(IWT) and shipping projects, aims to increase capacity, raise Paradip 39 66 60 106 28 24
private participation, and improve the quality of service and
Visakhapatnam 50 56 75 108 38 26
efficiency in the port sector.
Ennore 12 13 35 64 14 65
• Under the port sector, 276 projects have been identified
in the 12 major ports in the country, with an anticipated Chennai 42 49 74 72 14 22
investment of INR558 billion. The various projects, when Tuticorin 16 21 36 64 24 46
completed, are expected to increase the total capacity of Cochin 15 19 33 55 14 79
these ports from 508 million tonnes in FY07 to 1,002 million
New Manglore 30 38 48 60 20 71
tonnes by FY12.
Mormugao 28 29 41 67 12 8
Mumbai 43 44 58 92 14 28
JNPT 33 52 59 96 32 73
Kandla 45 67 77 122 26 51
Total 396 509 650 1001 276 558
Source: Planning Commission (Working group-11th plan), NMDP, Centrum research
Conclusion
The share of the railways is expected to increase substantially in the long term due to various
drivers such as increasing exim and domestic volumes, containerization, investment in port and
rail infrastructure and the entry of private players. This will benefit players who have made heavy
investments in rail infrastructure.
References
• Logistics Sector, April 2009, © Centrum Broking Private Limited
• India Transportation: Sea and Land Cargo, February 2009, © Nomura Financial Advisory and Securities (India) Private Limited
• Ernst & Young research and analysis
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8. India sector news 3
A. Policy and infrastructure INR574.5 billion. The projects are expected to involve
upgrading or construction of berths, deepening of channels
1. Government lays down plans for port expansion and procurement or replacement of equipment.
To augment the capacity of major ports in the country, The government is also planning to set up a regulatory body,
the Ministry of Shipping (MOS) has identified 21 which will consist of a Chairman and four members, who will
expansion projects on a PPP basis at a total investment of oversee the functioning of major ports. It has drafted the
INR160 billion. Major Ports Regulatory Authority Act, 2009. The authority
will fix the rates from time to time and will lay down the
These projects are scheduled to be awarded in a phased performance norms and standards of quality, continuity and
manner by March 2010 and will involve mechanization of reliability of service.
berths, construction of new berths, and development of
2. Meager addition of gross tonnage (GT) by Indian shipping
bunkering and cruise terminals. The bidding process for 16
companies in 2008
projects is currently under way and requests for qualification
have been issued. The MOS is also in the process of The country’s total shipping GT increased from 9.03 million
identifying another 10 projects that are to be developed in 2007 to 9.3 million in 2008. Its GT fell from 9.32 million
during FY11. on 1 February 2009 to 9.28 million by the first week of J
une 2009, although the number of ships increased from 916
Proposed investments to 938.
Port Facility Cost (INR billion) 3. Authorization of ports by the Government of India (GOI)
JNPT New container 67 to award contracts independently
terminal The GOI has empowered port authorities to award contracts
Standalone 6 to selected bidders under the PPP mode without the prior
container terminal approval of the MOS.
Paradip Deep drought iron 6 The MOS has written to all port trusts, authorizing them
ore berth* to sign concession agreements for PPP projects at their
board level. However, the MOS must be informed about all
Deep drought coal 5
the work awarded.
berth
Tuticorin Container terminal 3 4. Gangavaram port inaugurated
Mormugao Coal terminal 2 Gangavaram port, built at a cost of INR20 billon near
Visakhapatnam on the Bay of Bengal coast, was inaugurated
New Mangalore Mechanized iron NA
in July 2009. The port is built by the D.V.S. Raju-led
ore terminal
consortium on land provided by the Andhra Pradesh
Ennore Container terminal 14 state government.
*This project has already been awarded to a consortium comprising Gammon It is the only port in the country with the infrastructure
Infrastructure, Minerals and Metals Trading Corporation and the Nobel Group. to handle super cape-size vessels of up to 200,000 dead
During the 11th Five Year Plan period, investment in weight tonnage (dwt) carrying coal and iron ore. In the first
the PPP mode is estimated to be INR380.8 billion out of phase, five berths have been constructed with an annual
the total planned investment in ports amounting to capacity of 35 million tonnes. In the second phase, the port
will add nine more berths that will handle dry and break bulk
and container cargo with dedicated cargo-centric zones.
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9. Port users will benefit from the following:
• Reduced per tonne ocean freight due to larger parcel
sizes at deep draft berths.
• Reduced waiting time and faster turnaround of vessels.
• Cost-efficient logistics solution to high-speed cargo
evacuation systems.
• Competitive tariffs.
The port has already achieved record discharge rates
of 70,000 tonnes of coal every day. It has set a target
of reaching 200 million tonnes with 29 berths between
2015 and 2020.
5. Concession agreement signed for Paradip port
The MOS signed a concession agreement to construct a
deep draught iron ore terminal at Paradip port. The pact
was signed between the Paradip Port Trust and Blue Water
Iron Ore Terminal, the concessionaire for the project. Blue
Water is a special-purpose vehicle floated by the consortium
Proposed investments
of the Nobel Group of Hong Kong, MMTC Ltd. and Gammon
Infrastructure Projects Ltd. Categories Investment (INR billion)
The consortium will build a deep-draught iron-ore terminal Gauge conversion 19.1
at a total cost of INR5 billion (USD11 million). The terminal Machinery and plants 17.9
will have a draught of around 16 meters, which will enable it Restoration of dismantled 20.5
to handle vessels of up to 180,000 dwt. Currently, the port lines
can accomoodate vessels of up to 75,000 dwt. Construction
Building new lines 29.2
is expected to begin in the next three months and will be
completed by mid 2011. Amenities of staff and 15.3
It is the first port project to be implemented under PPP passengers
in the sector according to the new model concession
agreement approved by the cabinet and the tariff fixed by
the Tariff Authority for Major Ports (TAMP).
6. Railway budget proposes infrastructure development
Indian Railways (IR) plans to invest INR2,300 billion during
the 11th Five Year Plan period to improve its productivity. In
the FY10 budget, IR announced its plans to invest INR407.5
billion in activities related to throughput enhancement of
high-density network routes, improvement and expansion of
traffic facilities and networks, construction of flyovers and
by passes and improvement of goods sheds.
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10. Other key initiatives announced in FY10 budget:
• Formation of expert panel for rail optic fiber network
In the FY10 budget, IR announced its plans
• Use of rail land bank for industrial purposes
to invest INR407.5 billion in activities
• Setting up of a coach-manufacturing factory with a
related to throughput enhancement of high- capacity of 500 coaches per year
density network routes, improvement and • Acquisition of 18,000 wagons during FY10 as compared
expansion of traffic facilities and networks, to 11,000 wagons in FY09
construction of flyovers and bypasses and • A 700 km lane, doubling in FY10 as compared to
doubling of 363 km lane in FY09
improvement of goods sheds.
• The Delhi Mumbai Industrial Corridor to be developed in
the PPP mode
• Setting up of a 1,000 MW power plant with NTPC
• Gauge conversion of 1,300 km during FY10
• Development of an Eastern Industrial Corridor
and utilization of railway land bank for it
7. IR focusing on PPP
IR is planning to implement various PPP projects, including
the construction of 50 world-class stations, medical and
nursing colleges, logistics parks and cold storage facilities.
The biggest project is the Delhi-Mumbai Industrial Corridor,
which will include industrial hubs, rail port connectivity,
logistics parks and mega power plants — all through PPPs.
The Railway Ministry aims to encourage private ownership
of special- purpose rolling stock and private operation of
freight terminals. The Ministry unveiled a new policy to allow
construction and operation of private freight terminals and
multi-modal logistics parks. It will also allow containers to
access private sidings to attract piecemeal traffic presently
not being carried by the railways.
8. Tax incentive to attract funds for warehouses and
cold storages
In the FY10 budget, the Finance Minister announced a tax
incentive scheme to attract investments in the warehousing
and cold storage sector. The scheme proposes that all capital
expenditure, other than expenditure on land, goodwill and
financial instruments to build and operate such facilities, can
be treated as tax deductions.
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11. India wastes 25–30% of its fresh produce due to lack of 3. DHL focusing on automotive supply chain in India
post-harvest management facilities, absence of suitable DHL is planning to augment its automotive supply chain
cold storage facilities and lack of an organized distribution by building warehouses in major cities to provide
system. The industry estimates this spoilage to be worth warehousing services for export of automobiles and
INR500 billion at current prices every year. automotive components.
Within India, DHL has dedicated automotive teams that
B. Company buzz provide strategic consulting services to a diverse range
of customers, from international players seeking to
1. Dolphin Offshore to build shipyard
expand their presence in the domestic market to domestic
Dolphin Offshore has laid down its plans to construct a companies aiming to go global. The company services more
greenfield shipyard at Jaffrabad in Gujarat. This shipyard than 50,000 customers across India. Its key customers
will be built in three phases during the next five to six years. include Mahindra and Mahindra, Skoda, Maruti Suzuki India
A total land area of over 250 acres is to be built at a cost of Ltd., Hyundai and Tata Motors Ltd.
USD85 million. The company is also looking for a JV partner
for the proposed shipyard. 4. Pratibha Shipping planning to expand fleet
The shipyard will focus on small and medium-sized anchor Pratibha Shipping plans to expand its fleet to honor
handlers, supply vessels and multipurpose support vessels its long-term business contracts with the Jamnagar-based
and will also repair offshore vessels and jack-up rigs. Reliance refinery. The company is scouting the second-hand
market for two crude tankers. It is looking for double-hull
In the first phase, expected to be completed in the next two
panamax and suezmax units that are around 10 years old.
years, the company plans to set up a fabrication facility
for its own offshore engineering contracts, one slipway, Poompuhar Shipping seeking to expand fleet
machinery shops and an office block. State-owned Poompuhar Shipping plans to acquire two
The second phase involves the construction of two jetties bulkers of between 28,000–55,000 dwt on a long-term
and an outfitting berth, while in the final phase it is planned charter to transport coal for state-owned utilities in Tamil
that a drydock facility will be developed in the yard to repair Nadu. The bulkers will ship coal from either Haldia or the
jack-up rigs. Currently, no domestic yard in India has facilities Paradip port to Tuticorin.
to undertake repair of jack-up rigs. 5. Universal Success Enterprise Ltd. to invest in ports
2. Launch of operations to India by Maximus Air Cargo Singapore-based Universal Success Enterprise is looking to
Abu Dhabi-based Maximus Air Cargo has started operating invest nearly USD1.5 billion in ports to serve two 10,000-
seven cargo flights a week between the Middle East, the MW power facilities in West Bengal and Gujarat and one
Indian sub-continent and East Africa for Etihad Airways. 5,000 MW facility in Maharashtra. The ports will initially
manage coal imports, but are eventually expected to handle
Maximus is deploying Airbus A300-600RF aircraft and
ore and containers.
serves Nairobi, Chennai, Colombo and Bangalore. From
September 2009, it will begin two flights a week to The ports’ facilities will have a draught of between 18–20
Khartoum, Kolkata and Dacca. In addition, the company will meters and will be able to accommodate vessels of up to
acquire another factory-built A300-600 freighter to fulfill its 250,000 dwt. Work is expected to commence by the middle
Etihad contract. of next year and will be completed in 2015.
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12. 6. Kalindee Rail Nirman banking on freight corridor project 8. Growth in domestic traffic reported by Container
Kalindee Rail Nirman expects to receive orders worth INR5 Corporation of India (Concor)
billion from the Indian government’s freight corridor projects Concor recorded a 14% y-o-y growth in its domestic traffic
in FY10. It is anticipated that the government will allot during 1Q09. However, its international traffic declined by
orders worth INR20 billion for the freight corridor projects 9%, y-o-y, during the same period due to global recessionary
in FY10. trends. The company has increased its focus on improving
The corridor seeks to link north India with ports on the its share in the domestic market to offset the decline in
country’s eastern and western coasts. Kalindee Rail will contributions from its EXIM segment.
supply signaling systems and carry out gauge conversions of 9. Sical Logistics enters JV for automotives
rail tracks. management yard
7. All Cargo Global Logistics (AGL) scouting for international Sical Logistics signed a JV agreement with Japan-based
acquisition Mitsui OSK Lines Ltd. (MOL) to set up an automotive
AGL is exploring global acquisition opportunities in the management yard at Ennore port near Chennai. The yard
non-vessel- owning common carrier (NVOCC) space. The will manage automotives in complete built-up unit (CBU)
company is looking for country-specific NVOCC firms to form and will cater to automotive exporters and importers
consolidate its presence in markets including Europe, US based in India.
and China.
This proposal has come at a time when AGL has put all
its major expansions on hold. The company is currently
only investing in capacity expansion at its existing container
freight station locations in Chennai and Mumbai. It has
also deferred its plans of setting up 10 logistics parks, at
a cost of INR3.4 billion, for which it had acquired land at
various places.
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13. Market watch; logex v/s sensex
C. Market watch
The Logex index provides a quick snapshot of the
100
performance of Indian logistics companies as compared to 90
the market as a whole. This index comprises 12 logistics 80
companies listed on Indian stock exchanges. Index number
70
We have highlighted the performance of the Logex as 60
compared to the Sensex over the last 12 month period. 50
40
In July, the Logex continued its journey upward by closing 30
at 8% higher than in June. The Sensex also shows a positive 20
performance by moving up by 8%. 10
0
Jul Aug Sept Oct ' Nov' Dec' Jan' Feb' Mar Apr May Jun Jul
'08 '08 ' 08 08 08 08 09 09 '09 '09 '09 '09 '09
Logex Sensex
S.no. Company Fiscal year end Current FY2009E FY2010E FY2011E
Domestic P/E EV P/E EV/ P/E EV/ P/E EV/
EBITDA EBITDA EBITDA EBITDA
1 All Cargo Global Logistics December ‘08 19 15 17 10 15 na 13 na
2 Arshiya International Ltd March ‘09 40 40 10 4 na na na na
3 Blue Dart Express Ltd. December ‘08 16 9 na na na na na na
4 Container Corporation of India March ‘08 17 14 17 12 15 11 na na
5 Gati Ltd. June ‘08 17 12 na na na na na na
6 Gateway Distriparks Ltd March ‘09 11 10 13 na 10 na na na
7 Transport Corporation of India March ‘09 19 8 15 7 12 7 na na
8 Sical Logistics Ltd. March ‘09 31 na na na na na na na
9 Aegis Logistics Ltd. March ‘09 8 5 na na na na na na
10 Balmer Lawrie & Company Ltd March ‘09 7 6 na na na na na na
Average 185 119 72 33 52 18 13 na
Intenational
1 Kuehne & Nagel December ‘08 19 10 20 11 19 10 17 9
2 CH Robinson December ‘08 25 14 25 14 23 13 20 12
3 United Parcel Service December ‘08 19 9 25 11 20 10 16 8
4 Wincanton March ‘09 17 4 9 4 9 4 8 4
5 TDG September ‘08 13 9 14 9 13 9 13 9
Average 93 46 93 49 84 46 74 42
Source: BSE, Bloomberg and Ernst & Young research. The Logex and the Sensex are indexed by taking the value of the last trading day of September 2007,
with 100 as the base. The Logex is calculated based on the sum of the market capitalization of 12 selected logistics companies.
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14. International sector news 4
1. FedEx Ground opens northern Ohio hub 4. Sino-Global Shipping America enters partnership with
FedEx Ground, the small package ground delivery unit of Forbes & Company
FedEx, opened a new USD90 million distribution hub at Sino-Global Shipping America has signed an exclusive
Toledo in northern Ohio as part of its ongoing network partnership agreement with India-based Forbes & Company.
expansion initiative across the US. Under the terms of the agreement, Forbes will recommend
The hub uses advanced material-handling technology that Sino-Global as its exclusive business partner to all its existing
will boost its processing rates to 22,500 packages per hour clients in India, and Sino-Global will serve all the company’s
on 15 miles of conveyor belts. With its projected future vessels appointed by Forbes in China. Similarly, Sino-Global
expansion, the facility will have the capacity to process will recommend Forbes as its exclusive business partner
45,000 packages per hour at full capacity. to all its existing clients in China, and Forbes will serve all
vessels appointed by Sino-Global in India.
The new FedEx Ground hub is part of the company’s
countrywide network expansion plan to exponentially 5. Aramex joins Cargo 2000
increase its daily package volume capacity and enhance In July 2009, global logistics provider Aramex joined Cargo
the speed and service capabilities of its network further. 2000, which is part of the International Air Transport
Since embarking on the multi-year expansion program in Association and provides quality management systems to
2002, FedEx Ground has opened eight new hubs that use the global air freight industry.
advanced material-handling systems and has expanded and/
Cargo 2000 re-engineers air cargo transportation schemes
or relocated more than 500 local facilities.
for shippers and consignees. Its processes are backed by
2. FedEx Ground opens hub in Chicago measurable quality standards to improve the efficiency of
FedEx Ground opened a new USD125 million distribution air cargo. The company’s members include around 60 major
hub in Chicago to boost its daily package volume capacity airlines, freight forwarders, ground-handling agents, trucking
and increase the speed and service capabilities of its companies and IT providers worldwide.
network further. 6. ProLogis leases 200,000 sq ft in Japan
The new 131,064 square meter facility will provide ProLogis, a leading global provider of distribution facilities,
enhanced processing rates of up to 30,000 packages an signed two new lease agreements during the second quarter
hour, additional load and unload doors, and more scan of 2009 that totaled 200,000 square feet of recently
tunnels and sorters. developed distribution space at ProLogis Parc Zama I
3. UPS reports sharp decline in profit in Japan.
UPS Inc., the world’s largest shipping carrier, reported a 49% The transactions included leases with the SEI Logistics
y-o-y decline in its net profit to USD445 million for 2Q09, Network and Kawataki. The distribution facility has several
as its sales declined by 16.7% y-o-y during the ongoing energy-efficient systems including a photovoltaic array and
economic downturn. a state-of-the-art seismic isolation structure. It is located in a
prime location with convenient access to the Greater Tokyo
The company reported that the decline in its domestic and
and Greater Nagoya areas.
international businesses is stabilizing, but volumes are
still significantly below last year’s levels. The average daily 7. Schenker Rail to set up cargo hub at Frankfurt Airport
volume of UPS’ US domestic package segment has declined Germany-based Schenker Rail, a unit of local state-owned
by 4.6%; its air volume has been flat while its ground volume railways operator Deutsche Bahn AG, will invest EUR50
has fallen by 5.4%. Its average daily export volume has million to set up an air cargo hub in Frankfurt.
decreased by 7.3%.
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15. The new site will have a 15,000 square meter hall on the
ground floor. The second floor will have a 10,000 storage
space for aircraft replacement parts.
8. Global Ground Support awarded supply contract by US
Air Force
Global Ground Support LLC, a wholly owned subsidiary of Air
T, has been awarded a new contract to supply deicing trucks
to the US Air Force. The contract was awarded for one year
with four additional one-year extension options that may be
exercised by the latter.
The award includes standard deicer trucks and extended-
reach deicer trucks along with shipping and training costs.
Air T provides overnight air freight services, manufactures
and sells aircraft deicers and other special-purpose industrial Aramex joins Cargo 2000
equipment and offers ground support equipment and facility
maintenance services to airlines through its subsidiaries. In July 2009, global logistics
9. All Nippon Airways (ANA) to merge Overseas Courier provider Aramex joined Cargo 2000,
Service (OCS) and Allexs which is part of the International Air
Japan-based airline ANA is merging its two express holdings, Transport Association and provides
OCS and Allex, to create a new regional integrator that will
quality management systems to the
offer door-to-door services using ANA’s airlift capacity.
The new company will benefit from OCS’ experience and
global air freight industry.
Allex’s sales network to leverage their respective strengths
and thereby expand their share of the region’s international
express market.
OCS and ANA had already launched a joint door-to-door
delivery service, known as BEAM, in July 2007. This service
provides high-speed, top quality and reliable international
deliveries, primarily between Japan and China, through
ANA’s freighter network and OCS’s collection and customs
clearance system.
10. Zhejiang HSD Industrial to purchase logistics assets
China-based Zhejiang HSD Industrial, which is engaged in
the development of real estate and provision of data system
integration services, plans to acquire a 100% stake in a
Shanghai-based logistics firm through a private placement.
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16. Logistics and deals 5
International deals 4. SNCF and Eurotunnel to jointly buy Veolia’s freight arm
France-based railway group SNCF and channel tunnel
1. Universal Truckload Services to acquire truckload operator Eurotunnel are expected to jointly acquire Veolia
operations of Pacer Transport Cargo, the freight arm of Veolia Environnement.
Universal Truckload Services has entered a limited asset Veolia Cargo was put up for sale to divest assets worth
purchase agreement to acquire certain assets of Pacer EUR1 billion (USD1.4 billion). Four suitors, including
Transport and two of its subsidiaries, S&H Transport and SNCF, Eurotunnel, Polish railway operator PKP and Italian
S&H Leasing. competitor Trenitalia, had expressed their interest to buy the
The assets include customers, operators, agent lists, files freight group.
and owned trailers, used in operations consisting primarily Initially, SNCF and Trenitalia offered EUR60 million and
of flatbeds, vans and specialized heavy-haul equipment EUR100 million, respectively. Later, the French railway
services throughout the US. operator teamed up with Eurotunnel and the two firms
The assets will be integrated into the operations of Universal submitted an offer for close to EUR100 million.
Am-Can, a wholly owned subsidiary of Universal Truckload 5. Geodis Calberson to acquire Cool Jet’s business
Services. The transaction is expected to be completed in
France-based transport provider Geodis Calberson has
August 2009.
signed a framework agreement to acquire the business of
2. Reddwerks acquires SeayCo Cool Jet, a company that provides domestic groupage and
Reddwerks, a warehouse performance management chartering services.
software and solutions provider, announced the completion In conjunction with this acquisition, Geodis’ groupage
of its acquisition of SeayCo, a warehouse control systems division
and sorting software developer. is acquiring full control of Prisme, a platform for the
Reddwerks’ support center and online portal will be available distribution of cultural products in bookstores, in which Cool
to both Reddwerks’ and SeayCo’s clients. Reddwerks will Jet had a
retain SeayCo’s customer support and development 50% stake.
executives The acquisition will strengthen Geodis’s position in France
to ensure continuation of the company’s product line and and accelerate the development of its European groupage
service teams. activities.
3. C.H. Robinson buys Walker Logistics Overseas 6. C. H. Robinson acquires Texas customs brokerage’s
C.H. Robinson Worldwide has acquired the international assets
freight forwarder Walker Logistics Overseas (WLO). C.H. Robinson acquired certain assets of International Trade
WLO is a global, fully integrated import and export, door- & Commerce (ITC), a Laredo Texas-based customs brokerage
to-door provider specializing in air and ocean freight, company specializing in warehousing and distribution.
warehousing, courier and logistics solutions. ITC provides a broad range of services that facilitate
This acquisition will help the company to expand its international customs brokerage in all transportation modes.
capabilities in the Asia-to-Europe trade and strengthen its Its services strengthen the company’s ability to provide
distribution and gateway capabilities for the London and customers a seamless cross-border service package across
Amsterdam markets. the US and Mexico.
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17. 7. Sinotrans Air Transportation Development (SADC) sells ABG has hived off its bulk cargo-handling assets at the
Beijing Sinotrans Express to DHL-Sinotrans International government-owned New Mangalore, Paradip and Vizag ports
China-based SADC has sold Beijing Sinotrans Express, its into a separate subsidiary, ABG Bulk Handling. Following the
cargo fright business, to DHL-Sinotrans International Air sale of the stake, ABG Bulk Handling will be renamed ABG
Courier for CNY46 million (USD6.74 million). LDA Bulk Handling, in which ABG will have a 51% stake.
SADC provides airfreight forwarding, air express, domestic Further, Singapore-based container port operator PSA
cargo transportation and logistics services. DHL-Sinotrans acquired a 49% equity interest in ABG Kolkata Container
International Air Courier is an express delivery joint venture Terminal for USD28.9 million and a 49% equity interest
of DHL Worldwide Network and SADC. in ABG Kandla Container Terminal for SGD80.9 million in
2008.
India deals 3. Caravel raises INR250 million from Swiss PE firm
1. 3i Group invests in Krishnapatnam port project Swiss private equity and venture capital firm BTS Investment
Advisors Pvt. Ltd. has invested INR250 million for a 17%
Krishnapatnam Port Company Limited (KPCL) sold a
stake in Caravel Logistics Pvt. Ltd. The latter is a Chennai-
minority stake, for USD161 million, to 3i India Infrastructure
based firm that runs warehouses and operates a container
Fund, an investment vehicle established by international
shipping service between Indian ports.
private equity firm 3i Group.
The investment will be used to buy a container ship that
Krishnapatnam is an all-weather port with 12 kilometers
can carry up to 700 standard containers, and also to set up
of quays in Andhra Pradesh that are operated as a landlord
a container freight station at Chennai, where cargo will be
port model. The port is expected to handle around 100
consolidated and put into steel containers before it is loaded
million tonnes of bulk cargo when it is completed. KPCL
on ships, and vice versa.
has been awarded a 30 year concession initially, which may
be extended by another 20 years, to develop, operate and Caravel owns containers and tractor trailers and has finalized
maintain the natural deepwater port. arrangements with private container train operators to move
containers from the premises and warehouses of cargo
2. Louis Dreyfus Armateurs acquires 49% stake in owners to ports for onward shipment. The company also
ABG Infralogistics plans to ship vehicles and temperature-controlled cargo such
France-based dry bulk port and shipping company Louis as dairy products and fruits.
Dreyfus Armateurs (LDA) acquired a 49% stake, for USD18.7
4. Ennore Port Ltd. (EPL) to sell a stake of up to 10%
million, in the Indian bulk port- handling operator ABG
Infralogistics (ABG). EPL is planning to sell a 10% stake to financial institutions
including Life Insurance Corporation of India and General
The companies seek to participate in the auction process
Insurance Corporation of India. The company intends to
for various bulk cargo-handling projects at Indian ports. On
use these funds to partly finance a dredging project. It is
winning new contracts, they plan to infuse fresh capital into
also modernizing the port to enable it to handle export of
the venture.
Nissan cars.
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17

18. References 6
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19. • “FedEx Ground opens $90m northern Ohio hub,” CEP • “Geodis Calberson to acquire business of Cool Jet,
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