| Economic Forum |
The business of long-haul trucking is starting to take off in China as the nation builds up the economies of its interior cities and upgrades its road networks, drawing major U.S. players such as Schneider National Inc. and YRC Worldwide Inc. Schneider is likely to make investments worth tens of millions of dollars in China within a year, Chief Executive Chris Lofgren said. With $3 billion in sales, Schneider is the largest truckload carrier in the U.S., delivering goods for clients such as Wal-Mart Stores Inc. With businesses looking to tap China's interior cities for its plentiful labor force and increasingly affluent consumers, there is a growing demand for better roads and trucking services. Beijing has already said it plans to more than double its current 41,000 kilometers of expressways in the next few years. Schneider's push into China is notable because the company currently has no major operations outside of North America. Last year, the privately held company, based in Green Bay, Wisconsin, set up an office in Shanghai offering consulting services and is in the process of obtaining a license to operate. "Our view on China is it's incredible, exciting, dynamic, in many cases very similar to the U.S. logistics environment in the 1950s," said Mr. Lofgren, describing the period when America's major network of interstate roads was first built. China's transportation system is still evolving, with most of its major manufacturing and businesses grouped around the country's coastal cities, making it easier to move goods using barges and ships. China still lacks a comprehensive road network and enough containerized and refrigerated trucks to transport goods to China's interior cities. That's why the cost of logistics-to transport and store goods and supplies between businesses-is so high in China. China's logistics spending is about 18.5% of gross domestic product, compared with less than 10% in the U.S. In 2005 the country's logistics industry saw sales rise 25% to 48.1 trillion yuan ($6.1 trillion), according to official statistics. In June of last year, YRC Worldwide said it was setting up a transportation company in a joint venture with Shanghai Jin Jiang International Industrial Investment Co., China's second-largest air-freight forwarder. YRC, formerly known as Yellow Roadway and based in Overland Park, Kansas, invested $45 million for a 50% equity stake in the venture. Mr. Lofgren said Schneider prefers to make acquisitions instead of forming joint ventures. "We want to maintain ownership. We would look to potentially make one or two acquisitions to give us an infrastructure and base, but look to invest equipment, train people and build organically."
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