Tiong Nam to launch new route to China

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This article first appeared in The Edge Financial Daily, on November 7, 2016.

 

KUALA LUMPUR: Johor-based Tiong Nam Logistics Holdings Bhd, which saw its share price climb to an all-time high of RM1.76 last Tuesday, is set to embark on a new route to China in January next year.

Riding the wave of e-commerce boom, the homegrown logistics firm is creating an Asean-wide cross-border road transportation network that will link Singapore, Malaysia, Thailand, Laos and Vietnam with its hub in Guangzhou, China.

Tiong Nam managing director and founder Ong Yoong Nyock sees growing demand for its services, as Beijing’s “One Belt, One Road” policy is expected to boost business activities between China and Southeast Asia.

As such, the group in September set up its first transport hub in Guangzhou.

“Our hub is connected to other cities in China including Shanghai and Suzhou. Basically, we gather all the goods from China in Guangzhou, before sending them to other countries. We will provide a road transport solution catering to growing trades between China and Asean,” the low-profile, media-shy Ong told The Edge Financial Daily in an interview.

Ong, 64, has 38 years of experience in the logistics industry. He started the transport business in 1975 with a small fleet of lorries transporting general cargoes in Johor. Today, Tiong Nam is the largest trucking company in the country with about 2,000 lorries of various capacities, including open, box, bonded and refrigerated containers.

According to him, the delivery of goods from Guangzhou to Kuala Lumpur is expected to take only five days, while the Guangzhou-Singapore route will take six days.

The 2,500km journey will pass through Hanoi and Lao Bao in Vietnam, Savannakhet in Laos, cross the Second Thai-Lao Friendship Bridge, on the way to Bangkok, and all the way down to Kuala Lumpur, Johor Baru and Singapore.

Ong said Tiong Nam will operate four transport hubs in China, Laos, Thailand and Malaysia, with three major routes of China-Vietnam, Laos-Thailand and Thailand-Malaysia. Currently, it is already providing cross-border transportation services plying the Singapore-Malaysia and Malaysia-Thailand routes.

“We have bought five trucks in Laos. With only one single permit, they can move around in three countries, namely Laos, Thailand and Vietnam. We plan to deploy at least 50 trucks in the future,” he said.

Ong highlighted that Tiong Nam will be one of the first, if not the first, Malaysian-based logistics firms that are capable of delivering goods from China to bonded warehouses in the Klang Valley.

“So far, no Malaysian players are doing this because it requires a lot of money. I think they will follow suit but it’s not easy. You need to have proper planning, and you need to set up hubs in strategic locations, because you can’t expect the driver to drive all the way up to China by himself,” he explained.

Meanwhile, Ong expects strong orders for the delivery of China-made building materials, dinnerware and hotel toiletries, whose prices are much cheaper than those locally made, so much so that the buyers have little option but to import from China.

“We have plenty of goods coming from China; I’m not worried at all; it’s definitely more than what we are capable of doing. My only concern is that we don’t have enough goods to send up north,” he said.

Ong went on to say that Tiong Nam’s cross-border trucking transport services will offer hassle-free solutions and flexibility, with a reasonable rate of about US$200 (RM842) per cu m.

“Our speed’s equivalent to air freight, but at lower costs and faster than sea freight. Not only that, we are equipped with a fleet of refrigerated trucks, and we are talking about one-stop door-to-door services from origin to destination,” he said.

Ong also pointed out that ordinarily, the payment of duties on imported goods would have to be made at the time of importation. However, with bonded facilities, Tiong Nam’s customers can transport taxable goods in bonded trucks and store them in bonded warehouses without having to pay duties until the goods are eventually exported. This allows customers to delay the tax expenditure, reaping cash flow benefits.

“There are a lot of Malaysians who travel to China for the procurement of goods, but from now on, by using our cross-border transport services, they don’t have to go through all the hassles,” he said.

Ong added that in the future, Tiong Nam could even become a total logistics company offering e-commerce services.

Year to date, Tiong Nam’s share price has gained 24.8% to close at RM1.71 last Friday, giving it a market capitalisation of RM712.6 million.