Such demand has not escaped the notice of global cargo and shipping companies. French container shipping company CMA-CGM this spring took control of Cheng Lie Navigation, a listed Taiwanese marine transportation firm, for T$5.25 billion (US$161.6 million).

Large Asian-based logistics groups are also competing for a greater presence. Shueau Cheah, general manager of Singapore-listed Pan-United Corp., told mergermarket it was looking for targets in Asia, particularly China. And Chinese players are also entering the fray: Tianjin Port Development recently agreed to pay Rmb524 million (US$69.9 million) for a 40% interest in Tianjin Port Alliance's international container terminal.

Analysts suggest that acquisitions are the most direct route to securing a space in the industry for an established transportation group.

Chu Kong Shipping's chairman Honglin Hua is exploring shipping-related businesses in south-east Asia, whi le Hong Kong-listed Pacific Basin Shipping also expects to confirm an acquisition in China within a year, according to a Mingpao Daily News report. With 2006 revenue of US$620 million, Pacific Basin is the world's leading owner and operator of "handy-sized" ships providing dry-bulk shipping and logistics services.

Seeking out investors

Analysts predict that as small- to medium-sized logistics businesses compete, they will need the support of larger logistics players able to provide capital and customer networks.

Small businesses in the region are striving to attract investors to increase market share. Qingdao Kaichuang Industry, a logistics service-provider built on an investment of US$5 million, is one such firm, according to company owner Frank Wang. He remarks that Olympic Games events in Beijing and Qingdao will bring with them many opportunities for development.

Edmund Chew, founder of private logistics company Astrans, believes that logistics services will be increasingly required from Asia. He wants to attract a strategic investor in order to gain a network for his firm, headquartered in Singapore. "A Chinese or European industry player wanting to expand in China or India would be great," he remarked.

Another example is G Link Express Logistics. Its co-founder, Daniel Lim, is keen to attract a strategic investor and says Greater China is a focus. G Link expects to raise between US$20 million and US$25 million from a 50% stake sale, a cash injection that could fast-track growth. The firm has operations in Malaysia, Cambodia, Vietnam, China, Thailand and Indonesia.

Acting as a hub

In 2006, the mainland saw GDP growth of 10.7% and foreign trade up by 23.8% year-on-year.

But as the global manufacturing industry has moved to China, the Chinese economy's dependence on world economic conditions has increased. From small- to medium-sized logistics firms to large logistics groups, most companies have shown an interest and are trying to expand their network in the Greater China area.

In China, 90% of imports and exports are transported by sea, meaning that port facilities are key for economic development. Analysts suggest that the most valuable port resources in the world are in China. However, Chinese ports are mostly owned by the government, so the chance of direct acquisitions by overseas companies is slight.

Sichuan Changtong Port, a state-owned inland port company in Sichuan, was put up for sale on October 31 last year at an asking price of more than Rmb94.6 million. Several foreign and domestic companies have shown interest. However, according to an industry source, the sale was terminated by the government, which belatedly decided it didn't want to sell out, especially to a foreign firm.

Foreign companies interested in the logistics space in China would be well-advised to work with local firms; buying substantial stakes or setting up a joint-venture are options as a lot of private logistics companies are up for sale and keen to involve overseas strategic investors, which can bring cash and a network extended outside of China.