October 25, 2007 -- On October 8, Icelandic company Eimskip announced the signing of a letter of intent to acquire 60 percent of the Chinese container depot company Qingdao Luyi Depot, with a further option to buy additional 20 percent. The news follows Eimskip's recent opening of China's largest cold storage facility in Qingdao.

"Since starting its business in China as a reefer freight forwarder, and offering non-vessel operating common carrier services services, Eimskip has been developing to maximize its logistic solutions," James Liu, CEO of Eimskip Asia told Emerging China.

Non-vessel operating common carrier services services (NVOCC) include such services as pre-carriage and export documentation, he said.

"To Eimskip, the acquisition of Qingdao Luyi Depot, as the result of drives from the market, has become the necessary link bridging the freight forwarding and NVOCC services with cold storage services," he added. "Eimskip has established a steady base for all onland resources."

Qingdao Port is China's largest refrigerated container port. "Qingdao now has grown into the biggest reefer volume business branch across Asia, and it has become the headquarters for Eimskip Asia," said Liu. "This is the first step for Eimskip's expansion in China and we will promote and duplicate this successful model. Our next step will be to increase our investment in Asia, while focusing on the reefer logistic business."

"The investment from foreign operators as such Eimskip will bring in a new logistic operations model, improving logistics in local and surrounding areas," an officer from Qingdao Customs Office, who wished to remain anonymous, told Emerging China. "It has also has set an example for the foreign companies that are interested in investing in China."

Despite the recent investment by foreign companies acquiring market share, local companies still have a secure position.

"Since China opened its door to foreign invested logistic companies, the market has become more demanding and competitive," Yu Hui, owner of local Yixin International Transportation and Logistics Co. Ltd. told Emerging China. "Storage facilities and depots, are very important to complete a satisfying logistic solution. In competition, domestic companies will always have advantages with their local relationships; and for foreign companies, their investments on the hardware facilities is their competitive edge to win business."

Eimskip, which was Iceland's first shipping line, is now one of the country's largest container shipping and refrigerated logistics companies, operating with 200 locations over more than 30 countries around the world, with a total of 14,500 employees. It has four offices in China.

Luyi Depot, established in 2000, is a container stevedoring company with a total base depot operational area of approximately 110,000 square meters, currently the fifth largest in Qingdao. It has a strong customer base including that includes major shipping lines, such as Maersk, CMA CGM and Yang Ming.