Global Logistic Properties (GLP), the provider of modern logistics facilities in China and Japan, says it has entered into a binding agreement to establish a joint venture partnership where GLP will own a 60% stake in Zhejiang Transfar Logistics Base Co.
The JV will own three assets that are masterleased to the operator of Transfar Road-Ports. Going forward, GLP will develop and operate logistics parks adjacent to future road port projects providing a total solution platform for customers.
The “road port” business addresses the main problems of the domestic road logistics industry by creating a hub. This hub centralises information by assisting manufacturers, retailers and third-party logistics companies (3PLs) to optimise the transportation of their goods domestically while utilising small and medium sized trucking companies, which represent the majority of all trucking done in China. The strategic cooperation between GLP and Transfar Road-Port will integrate two major components in China’s industrial logistics chain to lower costs and improve efficiency for customers.
Transfar Road-Port currently owns three operational road ports projects in Hangzhou, Chengdu and Suzhou with a total net leasable area (NLA) of 951,354 square metres. Transfar Road-Port has full ownership of the projects in Hangzhou and Suzhou and 75% share of the Chengdu facility. Local governments welcome the road port business model as it creates a centralised logistic hub and generates significant tax revenues.
Road transportation remains the main mode of freight transportation in China at 77% of total freight volume but is very inefficient given the majority of freight is transported through individual trucks (owned by small to medium enterprises). Demand for road port facilities is expected to grow in tandem with increasing domestic growth consumption.
Under the strategic joint venture, GLP will partner with Transfar Road-Port to develop logistics hubs. GLP will develop and operate warehouse facilities adjacent to the logistics hubs in future projects. Transfar Road-Port will focus on providing supporting services at the hub. As the market matures, GLP has the option to convert the hub’s existing truck storage areas into warehouse facilities.
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