- THE MAGAZINE
CEVA Logistics announced it had completed acquisition of its joint-venture CEVA Ground operation in China. It will now operate as a wholly owned subsidiary.
The move solidifies CEVA’s position and reinforces its long term commitment to support the development of China’s fast evolving logistics industry, the company said.
Under the original agreement with local partner Shanghai J.Y. (Group) Company, CEVA owned a 70-percent share in CEVA Ground, and J.Y. Group owned the remaining 30 percent. The buyout transaction, which was completed on June 6, 2012, supports CEVA’s ability to provide end-to-end integrated solutions, the company said.
CEVA Ground's current operations also represent a unique, service-focused approach in China’s logistics industry, where intense competition, market fragmentation and cost pressures have driven many road transport providers to experience service quality and reliability issues, the company statement continued.
“The acquisition of CEVA Ground places us in a strong position to deliver against our business plan for China. As a wholly owned subsidiary, CEVA Ground will continue to exceed our customers’ expectations in terms of quality service and cost,” said Martin Thaysen, executive vice president of CEVA China. “We still value our partnership with J.Y., as we believe that our strengths are complementary in growing our capabilities, coverage and quality to successfully address the operational challenges presented by this vast market.”
Customer pain points and other deep insights into the China market were revealed by a recent survey jointly commissioned by CEVA and the Global Supply Chain Council (GSCC), CEVA’s latest initiative to better understand and anticipate the needs of its China customers. The results of the “State of Logistics China Survey 2012” offer a number of key insights:
- The most common services outsourced to 3PLs in China were direct transportation services (77 percent); 49 percent of respondents reported their largest intra-China logistical problems were related to cost and reliability of local providers
- Over the next one to two years, 64 percent of respondents believe that domestic transport is the main service in need of improvement. Domestic transport is also a big challenge for multinational companies (MNCs) that have resellers and clients in China
- The biggest challenge logistics managers of MNCs face is domestic transportation. The rising number of foreign companies entering the China market, the increasing number resellers and customers, and the growing importance of the China market indicate that domestic transportation challenges will only continue to increase.
“This survey highlights the existing challenges in the Logistics industry in China and issues that must be addressed by all service providers, including CEVA, as they continue to operate in the Chinese market,” Thaysen added.