Jun 8, 2015

Kokubu opens multiple-temperature logistics biz in Myanmar

Refrigerated vehicles of KOSPA

Food wholesale giant Kokubu & Co. (headed by its president, Kanbei Kokubu) has launched its three-temperature warehousing and logistics business in Myanmar. The joint venture company (jvc) that it put up in Yangon last year has been engaged in the transport of processed meats, fruits and vegetables, medical goods, fishery products and other cargoes, but it was recently commissioned to undertake store deliveries using its three-temperature warehouse by Kentucky Fried Chicken (KFC) that is slated to open its first store in Yangon within this month. With this, it put up a three-temperature center in Mingaladon in the outskirts of Yangon and the said warehouse is now being used for deliveries within Yangon and to the suburbs from Yangon. The company is also studying the construction of a base in Mandalay, Myanmar's second largest city that is located in the central part of the country, that is a major hub for agricultural products.

Kokubu established the 3PL cold logistics company KOSPA last year through a 50:50 equity share agreement with Yoma Strategic Holdings (headquartered in Singapore) of Myanmar's SPA Group. KOSPA operated nine frozen/refrigerated trucks (2-ton trucks) as of May this year to haul agricultural products, fishery goods and other products. It has also ordered three chassis for 40-foot containers. The company has 29 employees at present.

Prior to its entry into the Myanmar scene, Kokubu had been engaged in the cold chain logistics business in China and Vietnam. The company's overseas business expansion moves are premised on three principles, namely, (1) that the country is an emerging market, (2) its know-how and knowledge in Japan will be put to use, and (3) that there is a trustworthy partner present in the country of expansion.

With regard to (1), Myanmar has a population of 50 million people and is also rich in resources, so the potential there is huge. As for (2), Myanmar is an agricultural country wherein agriculture accounts for a little more than 30% of its GDP. However, the quality of cargo distribution to the consumption areas from the production sites is deteriorating, so it is now faced with the problem of being forced to dispose of cargoes. The development of a cold chain has then become a national issue.

Now concerning (3), Serge Pun, who leads its Myanmar partner SPA Group, is a well-known figure in the country for being incorruptible, as evidenced in his company not being a subject of U.S. sanctions under the rule of military junta. The SPA Group is also engaged in a wide array of businesses, including aviation, education, finance, real estate, agriculture, car manufacturing and trade, making it one of the leading groups of companies in the country. Now Kokubu decided to make a foray into Myanmar after determining that the SPA Group satisfies all its three rules on overseas expansion.

In the transport of goods for KFC that is due to open its first store this month, KOSPA is a planning to haul the cargoes from an external warehouse for the time being. In the future, however, it will operate the above three-temperature warehousing center and use it in offering storage/delivery services. Just recently, it secured an approximately 24,000-sqm land in Mingaladon. Under Phase 1 of its development project, it will develop about 4,500 sqm of the site. To serve as cold facilities, it will build two F-class 550-sqm zones, four C-class/constant temperature 550-sqm zones and a dry 660-sqm area. Aside from those, it will also develop a cargo handling space. Mingaladon boasts of the advantage of making it possible for trucks to not go through the congested Yangon when moving goods to Thilawa, where industrial complexes and container terminals are being developed, from Mingaladon, so Kokubu's facilities in the area may also be used for export/import-related services in the future.

Kokubu is also contemplating on putting up a base in Mandalay, the second largest city in Myanmar next to Yangon. Mandalay possesses good access to Shan State, a major producer of agricultural products. It also has round-trip transport demand with the transport of seafood to Mandalay and agricultural products to Yangon. Mandalay's Muse area faces the border with Yunnan province, making Mandalay an ideal place for a relay station. Now for speculation purposes, Kokubu will study the launch of a base in Mandalay while monitoring the trends in land prices since the prices of land there are currently climbing to levels higher than Yangon.

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