UTi’s new Chinese Partner

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UTi Worldwide entered into a strategic partnership with Beijing Changjiu Logistics to take advantage of the rapid growth seen in the Chinese automotive industry. A STAT Times exclusive report from Beijing. Lu-Hai Liang...

UTi Worldwide announced their "strategic partnership" with Chinese company Beijing Changjiu Logistics recently in Beijing, with both companies emphasising the mutual benefits offered by the partnership. Speaking exclusively to the STAT Trade Times before the launch press conference Jens Moeller, Senior Vice President of UTi's automotive department, spoke about the growth in emerging markets in this sector. "About five years ago we started to pay more attention to the automotive sector. Now about 20 percent of our revenue is auto. [The sector..] has been growing very interestingly, with double digit growth rates in China, India, Brazil, Turkey,” he said. Moeller emphasised the importance of joint ventures in China and the contrasts between China and India, with the latter one of his responsibilities for UTi. "If you want to be on the ground in China you need local providers and JVs. This is not the case in India. We invested in India earlier than we did in China. We have a broader presence in India. [In China...] we have to build critical mass, not just go in with one client. We have to differentiate with freight forwarding and contract logistics which are easier to build." He went on to talk about the journey of building a relationship with Changjiu Logistics. "I just came from a senior management meeting from Chengdu. We're in a unique space for this partnership. They are the third largest logistics provider [in China] and it will help us to cover the entire supply chain. It will be an independent joint venture." And how long did it take to set up? "We've been talking for roughly a year. The first signature of the MOD came in November." Asked about the importance of the China market the response was swift: "Our CEO is here today for the opening, it's clear that this is one of the important projects," said Moeller. "We felt the capabilities between UTi and Changjiu matched. We are both independent companies. We can do things unlike those tied to OEM JVs, we can have logistics partners. VW, Daimler, BMW, Dongfeng, they do their own logistics. That limits them in how they approach a market. JVs tied to OEMS will make way for the independents," predicted Moeller. During the conference Changjiu Logistics' President Ma Deji focused on the mutual philosophies between Changjiu and UTi and their respective companies' entrepreneurial spirit. This was echoed by Ditlev Blicher, UTi's Asia-Pacific President, who said Changjiu's "true entrepreneurial spirit" matched UTi's. UTi Worldwide had been reporting losses for three of the six years that their previous CEO Eric Kirchner had been in charge, due in part to increased costs from the implementation of new service and billing platforms. He resigned in December 2014, and was replaced by Edward Fetizinger, 47, who has been with the company since 2010, as Executive Vice President of Global Operations and VP of Contract Logistics and Distribution. In his speech Feitzinger spoke about China's rise and about how this would be "China's century". He was effusive about the history of Changjiu Logistics, how it had grown from a local trucking company to become one of the biggest logistics and automotive parts companies in China in 20 years, founded by Board Chairman Bo Shijiu. UTi Worldwide has had troubled times as it reported its eighth straight quarterly loss, in December, as higher severance costs and lower freight revenues cut into earnings. They had been in talks with Danish trucking company DSV A/S but acquisition negotiations were called off abruptly. In a press statement, Ed Feitzinger said: "UTi has a presence in 250 plus branch offices and 59 countries around the world. This global footprint makes UTi an ideal partner for companies exporting and importing into China. Changjiu Logistics is a pioneer in finished vehicle transportation in China and has a mature transport network that can be adapted for parts and accessory distribution due to the already established trucking routes into Chinese dealerships. Our strategy is to develop an inland transportation system for both component milk run and finished goods deliveries utilizing UTi's solutions and best practices and Changjiu's strong trucking and warehousing capability in key automotive manufacturing and industrial centers in China. These areas offer a critical mass of auto clients for OEM, Tier one and Tier two, and are key clusters for UTi and Changjiu to focus on together."

   
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