In this interview, Keun-Tae Park, talks about the joint venture with Darcl Logistics, his company strategy to strengthen its presence in India and Asia as a whole, emerging trends in the logistics industry and impact of GST.
Q- Congratulations on successfully acquiring a 50 per cent stake in Darcl Logistics. How much enhancement do you see now in terms of market access in India?
A- Thank you. For us, India is an attractive logistics market with high growth potential. The country has the secondlargest population in the world with 1.3 billion people and a massive domestic market that generates GDP worth $2.25 trillion a year. Its logistics market is speedily growing in line with the domestic economy at a yearly rate of 15 per cent. I’m confident that this deal will help us in gaining a firm foothold and in making inroads into the Indian logistics market. This deal will certainly give CJ Logistics a bridgehead into the Indian logistics market and broaden our Asian network.
Q When did this process begin? When did you start talking about this acquisition with Darcl Logistics?
A- In 2013, we were introduced by the external advisors to Darcl Logistics. As you know effective due diligence is key to a smooth transition to a new post-merger organizational structure, we conducted due diligence and started negotiating with the management. The process of merging two organizations without doubt needs to be carefully designed toattain the needed return for the company. But, unfortunately, at that time, because of currency fluctuations in India and unstable global environment, we were not able to close the deal. Then again, lastyear we started our negotiations and here we are closing the deal.
Q- CJ Logistics also acquired Philippines leading logistics service provider Transnational Diversified Group (TDG) and Century Logistics, Malaysia secondlargest logistics company. How much does that broaden your operations in Asia?
A- We have been vigorously intensifying our global business, with M&A deals and joint ventures. We established a joint venture named CJ Transnational Philippine with the Philippines leading logistics service provider Transnational Diversified Group (TDG) in December, acquired Century Logistics, Malaysia second-largest logistics company in September last year. Very recently, we have acquired a Middle Eastern logistics company by acquiring a 51.02 per cent stake in Ibrakom FZCO in the UnitedArab Emirates. It is also one of the top players in the Middle East and CentralAsia that specialises in the transportationof heavy cargo. For your information, in 2013, we purchased a 51 per cent stake in a Chinese logistics company, SmartCargo, which has its forte in heavy transport and after that we bought China Rokin Logistics.
For your information, in 2013, we purchased a 51 per cent stake in a Chinese logistics company, SmartCargo, which has its forte in heavy transport and after that we bought China Rokin Logistics.
Q- Do you plan to seek more merger and acquisition targets overseas to reinforce your presence in the global logistics market?
A- The only coherent way for existing and new players to gain an edge in this tight delivery sector would be to spread out through mergers and acquisitions (M&As). Our foremost plan is to become a top-five global logistics company by 2020. We are incessantly broadening our channels for M&As and strategic alliances to step up as one of the five major logistics service providers in the world. We are now going to expand our business in other countries like Vietnam and Thailand, United States and in the European countries. In addition, we are planning to invest US$1.05 billion in food, bio, logistics, and contents for the next five years in the United States. Overall, we want to fortify our presence in the global freight transport market.
Q- How do you decide which companies to buy?
A- We have our own internal strategy. We are looking at companies all over the world that will supplement ourtechnology and business projects. It is also important that the M&A is mutually helpful for both firms concerned. In this case, we are confident about Darcl Logistics, which is India’s top transport company and third-largest logistics company. Darcl Logistics is methodically covering all regions of India with its four main bases established in each regional corner. This acquisition is a big step for us in satisfying our majestic plan to grow as the largest logistics company in all of Asia.
Q- How technology has evolved and contributed to the success saga of your organisation?
A- We are geared up to rewrite Korea logistics history. We are furnishing differentiated global logistics service, thanks to a wide range of our global network. We put our best efforts to deliver parcels and packages. We provide an integrated service across our supply chain with customers all over the world, which is not limited to logistics. Based on incessant changes and innovation, we try to improve client companies process and maximise customers base. CJ Logistics takes the initiative in digital transformation with TES integration which stands for Technology, Engineering and System & Solution. In today society, technology has been changing at an extraordinary pace. Global innovation helps people all over the world raise their standard of living and make basic consumer goods more accessible.
In addition, we are planning to invest US$1.05 billion in food, bio, logistics, and contents for the next five years in the United States.
Q- What are some of the major challenges you see in India for businesses?
A- A lot is happening throughout the industry, with contemporary issues and challenges budding every day. Global innovation helps people, all over the world, raise their standard of living and make basic consumer goods more accessible. Needless to say, good infrastructure, storage and warehousing facilities are essential for the growth of the logistics industry and Indian logistics industry is witnessing expansion and bringing more speed and competence to the system. India’s greatest tax reform (GST) – substituting an array of provincial duties with a nationwide goods and services tax– will absolutely transform the logistics industry. The unified tax system is likely to bring change on a far grander scale, taking out distortions created by differential taxes and duty structures imposed. This would further lead to reduction in number of warehouses and in turn logistics costs would reduce. Furthermore, this would save the time wasted at the long queues at check posts. That’s why it is right to say that GST would be helpful for the logistics industry and might trim down the operational troubles and cut down the logistics costs borne by the industry.
Q- What are the emerging trends in the logistics industry globally?
A- The speed of global transport and logistics is non-stop. The future of logistics is paved with technology and innovation. The global e-commerce logistics market is budding, as more consumer goods are sold online when compared with offline, which shows the increase in e-commerce penetration. The global e-commerce logistics market is on the rise also because of emerging technologies such as IoT, drones, automated warehouses, and automated trucks in the market. Such technologies are helping in speedingup the overall process of e-commerce logistics, and hence many e-commerce giants are adopting them because of such benefits. IoT provides a highly integrated transportation and warehouse management solution. It connects the integrated devices and in-vehicle sensors. Drones provide the delivery of the products within an hour, after the placement of the order.
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