Logistics news

Three stories caught my eye.

Source: World Atlas. I don’t really know what time period this is for, but who cares! PIRATES!

First, logistics is a messy business, especially ocean shipping. You are at the mercy of the elements, pirates, and regulations about fuel.

Add to that list sunken ships. A container ship sank on October 19 in the Long Tau channel, one of the main waterways into HCMC. It could be closed for a month, according to this article.

There are other navigable channels, but it appears that Long Tau has the greatest depth (important for these big container ships). This is not great timing given the big increase in shipments from Vietnam: “Monthly customs shipments into the U.S. hit a new high in August, according to SONAR data.”

Second, Mapletree Logistics Trust (MLT) is buying two logistics warehouse in Vietnam. This is a bit of different type of a transaction, because Mapletree Logistics is buying a bunch of logistic warehouses from its parent, Mapletree Investments (which owns a third of MLT). Basically, the parent builds and MLT buys. The Vietnamese assets are being bought at a P/NAV of 1.05x, while MLT trades at a P/B for 1.44x. So the deal should be accretive for MLT. Also, MLT is expensive!

The details of the transaction aren’t so important, but the underlying point is. MLT is happy to invest in these warehouses, and the parent (who gets the money), will be able to reinvest in additional warehouses. It is already building warehouses in the same areas as these two warehouses.

Plus, investors seem very willing to fund these acquisitions (MLT raised equity for a bit more than 50% of the cost).

Third, Singapore’s sovereign wealth fund, Temasek, is investing in Vietnamese logistics service provider, Scommerce. It looks like the amount is $100m, and this is after a 2018 investment from Olympus Capital Asia. Scommerce is using the funding to expand its Giaohangnhanh (GHN) and Ahamove divisions as well as invest in technology. GHN is a last-mile delivery service, while Ahamove is the on-demand delivery service (like UberEats but for any type of package). Scommerce also has a cross-border logistics subsidiary.

There are now a few companies that deal with on-demand and last-mile delivery. GoJek (Go-Viet) is one, and Grab is another. Both have gotten lots of money. And they are only the really big ones. There are also a number that have similar offerings (more details here).

It will be interesting to see how all of this plays out over time. In the last few years, there have been a number of companies that appeared to be market leaders (e.g. Vietnammm) that then lost that lead to newcomers. It is a tough business, it takes a lot of money, and it is unclear if the unit economics are all that great. I will talk more about this tomorrow, since it deserves a post of its own. Right now, before thinking too deeply about it, food delivery may not be sustainable, at least at current prices.