He
said the returns from the outsourcing business were
good, adding that the company was on the lookout for
more such contracts.
"ILB's own warehousing capacity or space like other
logistic companies is limited; the outsourcing business
gives us the opportunity to leverage more on our resources
and fully use ILB's logistics solutions. This is the
new way forward rather than just concentrating on traditional
businesses," he added.
Owing
to industry needs, such as short product-life cycle,
customised product requirements and faster lead times,
multinational corporations (MNC's) are outsourcing their
logistic needs.
He
said the improving economic climate had helped to boost
its local warehousing business in the last three months.
This has resulted in pushing ILB's local warehousing
utilisation rates to the brim from 80 per cent in April.
He
added that the improved business was also complemented
by improving better margins as a result of growing demand
and a recovery in the logistic sector.
Global
demand for the logistic business is forecast to grow
between 15 per cent and 20 per cent per year. The global
logistic market was estimated at US$3.4 trillion (RM12.9
trillion) in 2002.
On
its China operations, he said the company was
looking at a positive road and exponential growth
in revenue in the coming years. This is on the
back of growing demand for its services and rising
capacity space in its warehouses in China.
He
said growth for the last three years since 2000
was about 20 per cent.
In
addition, the profit margins in China are better than
in Malaysia due to the fact that the former is an emerging
market and in Malaysia the market is more competitive
and matured.
In addition, the profit margins in China are better
than in Malaysia due to the fact that the former is
an emerging market and in Malaysia the market is more
competitive and matured.
ILB
has two warehouses in China: Shenzhen and Shanghai.
In
Shanghai, ILB has a warehouse capacity space of 380,000
sq ft over 1.62ha. In Shenzhen, its warehousing capacity
is 700,000 sq ft and another 600,000 sq ft is being
constructed and is expected to completed in April.
ILB's
has so far invested HK$500 million in China on land
acquisition and construction of two warehouses.
He
said ILB was also looking to expand its Chinese operations
through the opening of new warehouses and getting other
logistic licenses to be a full-fledged logistic player
in
China. The licenses would include transport and Class
A forwarding licenses
ILB
subcontracts between 200 and 250 trucks for its operations
in China from about 10 contractors.
He
said it would continue to subcontract trucks and was
looking to buy between 30 and 50 trucks when it received
the transport license. A truck costs about RM100,000.
"We
are looking at places such as Hangzhou, Tianjin and
Shanghai for land to open more warehouses. This is due
to the encouraging demand from MNCs for our logistic
services. We are excited about our operations there
as market potential is tremendous," he said.
He
said its logistics solution, vendor managed inventory
(VMI), was well-received by its MNC customers in China.
VMI
is the practice of manufacturers making suppliers responsible
for determining the order size and timing, usually based
on receipt of production plan and inventory space.
For
the year ended Dec 31, 2003, ILB's operations in Shenzhen
and Shanghai posted a growth in turnover of 62.8 per
cent to RM26.7 million from RM16.4 million in 2002.
Pretax profit increased by 169 per cent to RM7 million
for the year from RM2.6 million in 2002.
This
compares with ILB's group pretax profit of RM11.37 million
on the back of turnover of RM165.33 million. The group
posted a net profit after minority interest of RM4.28
million in 2003.
Meanwhile,
he said ILB was positioning itself to be a regional
logistic player on the same playing field with the big
boys and capture a larger share of the MNCs market.
He
said ILB was setting up a joint venture company in Thailand
and was building an alliance with a local there. ILB
does trucking services from Malaysia to Bangkok for
MNC customers. It has a warehousing operation in the
Philippines through a joint venture in 2000. The company
also has warehousing and trucking operations in Singapore.
ILB,
an investment holding company, through its subsidiaries
provides public bonded warehouses, freight forwarding,
shipping agents, bonded trucking, and transportation.
The
company also invests in property and provides property
rental, leasing and hire purchasing.
It
was formed to implement a restructuring to facilitate
flotation of Integrated Warehouse Sdn Bhd, Integrated
Forwarding & Shipping Bhd, Integrated Freight Services
Sdn Bhd and Integrated Leasing Sdn Bhd on Bursa Malaysia.
Major
customers are Matsushita, Sharp Roxy, Toray and IKEA.
The group also provides warehousing facilities in Shenzhen,
China, through Integrated Logistics (HK) Ltd and in
Cabuyao, the Philippines, through KP Integrated Sdn
Bhd. |
