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China road transport industry: big business, started late, inefficient high latent

Word:[Big][Middle][Small] 2016/4/9     Viewed:    

Road transport is China"s main mode of the flow of goods, is now growing in the last paragraph, the integration of the transition phase. Because of the late start time, the industry showed small, scattered, chaotic, and poor. The subject of the present report contains only a narrow LTL and truckload.

LTL: large and beautiful, and concentrated into the integration phase.

LTL has strong product homogeneity, the scale effect is obvious characteristics, typical profit model are: asset-heavy, low-margin, relying on high turnover, while mutual penetration LTL and courier is the trend. Oligopoly or monopoly industry is the steady state, LTL freight business is the pursuit of scale, large and beautiful. China LTL transportation market is moving towards a centralized from extensive development and integration phase, "one superpower and many" is the most obvious feature, the concentration of the top 10 domestic enterprises LTL only 4%, significantly lower than the United States 72 %. The next 10-20 years, be able to stay in business in this list will get much higher than the current market share, which is a left is king era.

Truckload: typical large business small companies, excellent light-induced.

Vehicle transport is characterized by: the largest freight market, low barriers to entry and enterprises are small and scattered, and the relative concentration of customers bargaining power is not strong. In the US market, for example, is divided into two types of operators: 1) traditional asset managers to own heavy trucks as the main characteristics under heavy asset model is difficult to achieve long-term competitive advantage, earn is hardly worth the effort. 2) the use of asset-light model to help shippers find carriers to complete the work, do not have deep competitive trap heavy asset management, achieved through the integration of the supply of transport enterprise bargaining power is a unique asset-light operators rules of survival.

We estimate that the domestic employment market in the vehicle transport between 1.2-1.6 trillion. If the reference to the US market, asset-light type car-free carrier holds 11% market share, the future of the domestic market space will be between 132 billion -1760 million, while at present even as mass logistics so deep industry for more than 10 years of business annual income is not more than 1 billion. We believe that the market cake bigger and enhance industry concentration degree will bring considerable room for development of the domestic asset-light car-free carrier.

LTL consolidation of reference to the US market, the excess yields mainstream companies significantly improve the fact that we believe that the current domestic LTL market seems to deserve a higher valuation, but unfortunately has not yet appeared suitable investment targets (Debon logistics may be a future option). Taking into account the transfer of the Group to the transfer of shares implantation on the road to Hong Kong assets on the secondary market, we recommend the logistics sector operating similar business investment in the Yangtze River, and also has a logistics real estate properties in the reservoir shares.


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