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City-Link Targets 20% Revenue Growth With New ‘Super Hub’

Date: 14 Feb 2012

City-Link Express Sdn Bhd is targeting a 20% growth in revenue for its fiscal year ending Dec 31, 2012, with the completion of its new RM65 million "Super Hub" in October this year and as it increases its market share in Malaysia and overseas. The express courier services company posted revenue of more than RM100 million in 2011.

It hopes that the “Super Hub” will contribute 20% to its growth target by having 25% of its total number of pieces shipped through this new facility.

The Super Hub is touted to be 12 times larger than the company’s present operations hub at the Glenmarie Industrial Park in Shah Alam (which currently sorts more than nine million shipments a year).

Company founder and chief executive officer Datuk David Tan said: “It would enable us to increase the volume of our business services which is in line with our ever growing business.

“It will set a benchmark in the whole of South-East Asia because of its unique RM5 million auto sorting machine that accelerates the speed of delivery times while sorting out shipments more efficiently. With this, it would contribute greater accuracy in ensuring shipments reach the intended customers.”

The Super Hub will house around 530 employees and will be located at Bandar Saujana Putra, a new township that is adjacent to Putra Heights.

“This is a strategic location as it would be situated along the Elite Highway and in the hub of the Southern Corridor of Selangor. This provides convenient access to the new facility via the Elite Highway which links North Klang Valley Expressway, Damansara-Puchong Expressway and Kesas Highway,” said Tan.

City-Link also aims to own up to a 25% market share in the domestic courier express services industry this year by expanding its reach to a larger customer base. The company’s estimated market share in 2011 was an approximate 15% to 17%.

“Some of the significant ways to boost our market share is by cutting down labour cost while providing better services to customers through faster delivery times, expanding infrastructure to support growth, continuous development of our quality workforce and to expand existing customer database through value added services,” said Tan.

In addition to this pipeline of plans, the company hopes to capture key markets in the small and medium enterprise (SME) and e-commerce industries as they are facing rapid growth together with the business population.

“The SME industry already comprises 99.2% of the businesses in Malaysia. In 2011, it contributed 32% to the country’s gross domestic product and is set to achieve 41% by 2020.

“The e-commerce industry is gaining momentum again in Malaysia and it’s almost certain it will attract more users in this industry as the country progresses into a developed nation. People are now more mobile than ever, hence they have greater access to the Internet, are more savvy technologically and tend to multitask,” said Tan.

City-Link also aims for a 10% growth with its regional business expansions.

“We will continue to grow our third-party logistics warehousing operations in the Asian region because of its vast potential. The company will target countries like Vietnam and China, especially the latter as it provides a fairly large contribution to our business volume,” said Tan, adding that the company shipped two to three tonnes of daily outbound deliveries from China in 2011.

However, lately, City-Link has experienced a slowdown as a result of its 2008 expansion to Japan and Europe.

“We exceeded our projected 2008 revenue growth of 11% from our Japanese expansion but it was also due to our expansions elsewhere.

“For now, we are facing lower activity in our Japan operations as we find that several Japanese businesses are shipping and relocating their businesses to other countries. We still maintain a bilateral relationship with our Japanese clients because we remain optimistic that there’ll be a pick-up in the near future,” said Tan.

He added that the company’s 2008 expansion through partnerships with some European companies also didn’t turn out as well as expected because of the previous year’s slowdown in the European economy.

The company has more than 200 branches and drop-in centres in Malaysia with express stations in Singapore, Indonesia, Thailand, Hong Kong, Vietnam and China.

Tan also said the company’s competitive edge is driven by “Glocalisation” in reference to the strong domestic consumption in Asia.

“We want to be global, and act locally at the same time. For example, our existing operation in Thailand does not cater just for international shipments (such as Bangkok to Singapore), but offers domestic services through its Hat Yai to Bangkok route. Hence, we don’t restrict ourselves to international shipments as there is great demand in the Asian domestic markets.”

As for the industry, he believes that Malaysia will have less than a handful of dominant players that are courier services corporations in the next five to 10 years.

“We foresee only one or two established Asian courier service providers as they will try to compete for greater market share in Asia,” he said.

On the possibility of an initial public offering for City-Link in the near future, Tan said: “We will probably consider it after three years from now.”

City-Link launched its revamped website today at www.citylinkexpress.com.

 




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