5th Interactive Session: Zhang Bin

Chinese version

Zhang Bin
CEO, Sinotrans, China

Build an Integrated Logistics Platform,
Provide Full Logistics Services to our Clients

Distinguished Guest and honorable representatives,
Ladies and Gentlemen,

First of all, on behalf of SINOTRANS Group, I would like to congratulate on the opening of the 3rd Euro-Asian Road Transport Conference, which provides good communication and networking opportunity for the colleagues in International Road Transport filed, and has great influence on the road transportation and logistics development in China. My topic today is 'Build Integrated Logistics Platform, Provide Full Logistics Services to our Clients". The two key points are: firstly, Restructure of SINOTRANS' logistics resources to build an integrated logistics platform supported by its freight system of air, ocean and land. Secondly, SINOTRANS believes in customer-oriented services and provides full logistics services to our clients.

Restructure of SINOTRANS' logistics resources to build an integrated logistics platform supported by its freight system of air, ocean and land.

SINOTRANS Group is a large state-owned enterprise with integrated logistics services as its main business together with ocean, air, land, warehousing and dock services as well as freight forwarding service. SINOTRANS keeps 'Customer-oriented Service" as our logistics merit, aims at 'Lowering the operational cost of our clients" for our service, follows 'Partnership and Win-win policy" as a standard service model and adapts 'serve the society" as our logistics tenet. For over 55 years development, SINOTRANS Group has possessed a nation-wide and international transportation network, established a diversified and associated operational model as well as built a integrated logistics platform supported by its freight system of air, ocean and land.

1. Healthy Asset Structure: in contrast to those large-scale transportation companies, which simply invest in sea freight or airfreight, SINOTRANS is an asset-light company with integrated transportation modes, a full set of logistics facilities and a balanced structure. At present, SINOTRANS Group boasts 135 warehousing enterprises, with an area of over 10 million square meters, a total storage capacity of 6 million square meters. The total warehouse area reaches 2.9 million square meters. There are 69 boned warehouses and warehouses under custom's supervision, 59 container freight stations, and 89 rail connections with total length of 67,215 meters. It manages an ocean shipping fleet with a 7-million -ton and excellent performance with includes 173 various vessels, say container vessels, bulk vessels, oil tankers, chemical tankers and roll-on/roll-off vessels. Its service lines are spread all over the world. SINOTRANS also has 20 self-supported and co-supported docks, 57 berths with a total length of 4,888 meter. SINOTRANS also owns with 4,694 operational vehicles (including 1,500 container trailers), some of them are equipped with Global Position System (GPS). SINOTRANS has built up the first -class express mail transaction centers at Shanghai Pudong Airport and Beijing Capital Airport.

2. Excellent Business Structure The proportion of the four major operations (ocean, air, land and warehousing) in Sinotrans Group is scientific and reasonable, with favorable payoff capability.
   
   In terms of air freight, it provides the customers with the receiving, cargo pick-up, delivery and packing, billing, customs clearance, distribution, space booking, space chartering, warehousing, flight chartering and door to door or desk to desk delivery services to the international and domestic aviation cargoes through the vast transportation network at home and abroad of SINOTRANS Air Transportation Development Co., LTD (a Shanghai listed company 600270). It has established joint ventures with the famous express corporations: DHL and OCS respectively, which can provide the customers with the high-level express delivery services, occupying 35% market share in the international express market.
   
   In terms of ocean freight, SINOTRANS manages 35 international container lines. It has established more than 60 branches of shipping agency. The ocean freight forwarder plays an important role in China. SINOTRANS is the largest freight forwarder in China and boasts perfect business management network at home and abroad.
   
   In terms of land freight, SINOTRANS Group can transact the operation of international railway containers and the whole train combined transportation at more than 60 branches in the mainland and on the borders. Over 170 auto transportation companies that spread all over the country can provide various transportation services of imported and exported cargoes for the consignors. At the same time, they can assist ocean freight companies and airfreight companies to develop multi-modal transportation and door-to-door services.

3. The Countrywide Transportation Network System: At present, SINOTRANS Group encompasses 41 subsidiaries and over 1,000 management entities in China. In addition, SINOTRANS also holds 22 overseas enterprises and 9 representative offices abroad and has established agency relationship with more than 400 transportation enterprises, which form the high quality and efficient transportation service networks covering the whole country and radiating the globe.

4. In possession of comprehensive experience in transportation: SINOTRANS Group has the comprehensive service capability and rich operation experience in freight forwarding, ocean freight, land freight, auto transport, air freight and warehousing. Especially the experience in the long-term comprehensive freight forwarding has cultivated and formed the capabilities of the whole-course organization, coordination and management that the comprehensive logistics requires.

5. Leading management concepts: SINOTRANS Group is an enterprise that takes the lead in joint venture, co-management and cooperation with multinational companies, absorbing advanced management concepts, management modes and marketing experience during the cooperation with the first-class foreign-funded enterprises, grasping a mass of technical methods on modern logistics network operation, cultivating a group of high-quality talents and forming customer-oriented management concepts earlier.

6. The capital operation has just formed a scale. SINOTRANS has had two listed companies SINOTRANS Air Transportation Development Co., Ltd in China and SINOTRANS Limited in Hong Kong. The capital platform of the group has just formed a scale. The comprehensive capabilities in capital operation of the two listed companies will provide the future development opportunities for the group. The capital operation and the asset operation will provide the favorable conditions to push the industrial integration and internationalized development of Chinese logistics industry.

7. Information Platform is being perfected. Recently SINOTRANS invested big amount of money on ERP Accounting System and some business information system, i.e. Air Freight System, Ocean Freight System, Integrated Logistics System as well as Warehousing and Transportation Management System. The development of these information systems makes it possible that the related business realize the standard business process and operation, data sharing and exchanging, track and tracing so as to improve the efficiency.
   
   Based on the existing systems, SINOTRANS has also established an integrated logistics information system involving our traditional business. The new system provides not only the information service for logistics operation and management but also the logistics decision analysis and support, evaluate and analysis of the supply chain plan as well as the supply chain solution to realized the optimized supply chain management.

8. Build up Integrated Logistics Capability. As to the ocean freight, in recent years SINOTRANS actively adapts to the change and development of the market, it adjusts the structure of its fleet and business layout. Ever since last year, ocean transportation market reached its peak, SINOTRANS took this opportunity to optimize the structure and enhance the assets quality of its fleet by selling some of its old vessels and entering into field of special commodities transportation like crude oil and cars.
   
   As to the airfreight, SINOTRANS Air Transportation Development Co., Ltd keeps the high growth trend, and in the meanwhile, offers brand new services. As a symbolic product, SINOTRANS Express Mail enhanced our express mail services. Due to its strong performance, SINOAIR has been recognized one of the blue chips enterprises in the market.
   
   As to the land transportation, SINOTRANS, via its subsidiary company Jiu Ling Transport and Storage Co., Ltd, starts its LTL Express (Less Than Truck Load Express), which is a road transportation product with guaranteed delivery time. With its network, SINOTRANS also provides cross boarder service and international combined transportation by offering rail freight forwarder service, SINOTRANS enjoys a favorable economical and social return.

SINOTRANS will do further restructure towards its air, ocean and land business aiming at enhance its integrated logistics capability. Through the adjustment of the business and management frame, improve its operation, carry out group sales, one-stop customer service and realize standard business flow, SINOTRANS will turn from a traditional foreign trade transportation enterprise into an international, integrated big logistics group supported by multi logistics entities.

SINOTRANS believes in customer-oriented services and provides full logistics services to our clients.

Integrated logistics are fast developed in China in the past few years, being one of the large state-owned enterprise, besides it basic advancement of enhancing its traditional business, strengthening its network, financial back-up, information system and business structure, SINOTRANS is growing with its competitors both at home and abroad in China logistics market and continuously improve its service capability and service level.

While providing high quality logistics service, we deeply feel that it is the historical responsibility that the 3rd party logistics service provider must face and take by offering customer-oriented service, satisfying the unique requirements of the customers and providing full logistics services to the clients. SINOTRANS successfully provides logistics services to our key customers like Michelin, P&G, Shell, Lenovo, Coco-Cola, Danone, Beijing-Hyundai, Super, Three Deer and so on. SINOTRANS key account logistics services are warmly welcomed.

P&G believes in 'Quality First" and its Quality Management System (QMS) are GMP Standard publicized by FDA. P&G prescribes all procedures including service provider into its QMS and indicates its detailed quality control requirements by 19 key elements (KE).

SINOTRANS P&G Project Team keeps the service spirit as 'Growing with the Clients" and does their up most to provide Safe, Reliable, Accurate, Cost-effective and Satisfied services. By providing a stable logistics team and strict quality guaranteed system, SINOTRANS P&G Project Team is approved by the client and its service expends from the finished goods warehouse management (10,000 square meters) initially to all finished goods warehouse management (70,000 square meters nowadays) of P&G Beijing factory, short distance transportation and a small finished goods warehouse management in the factory. The Project Team shows SINOTRANS advantage on customer service, operation management, source restructure, road transportation for short distance and long distance and city delivery, our on time delivery rate is over 98%, short and lost ratio is under 1/10000, which meet the satisfactory of P&G and the cooperation between SINOTRANS and P&G are really win-win to both parties. During the cooperation, SINOTRANS P&G Project Team experienced several tests on our service quality. Since the project started, the Project Team experienced 5 evaluations from P&G, it scored 96 points 3 times in the evaluation on July 28, 2003, June 11, 2004 and March 22, 2005. These achievements make SINOTRANS P&G Project Team win the Pinnacle Award for a Third Consecutive Year. In April 2004, SINOTRANS P&G Project Team is awarded 'Global Silver Award of QA" which is the only one in Asia and only two in the world.

Royal Shell Company is a famous international company, which pays special attention to the safety. Their management philosophy is always put safety in the first place. It is unique globally that the safety management rules of Shell are so specific, the requirements are so strict and the implementation is so strong. In this case, the gap between those Chinese transportation companies who just start their safety management and Shell is huge. In order to meet the safety management requirement, we organized our staff members to study HSSE (Healthy, Safety, Security and Environment) and other Shell regulations. The study helps SINOTRANS Shell Project Team change from our traditional management mode to one that meets the management requirements of Shell. During the two safety inspection by Shell, SINOTRANS Shell Project Team was highly appraised by Royal Shell Company. In November 2004, SINOTRANS Shell project Team was considered 'a team full of youthful spirits that you can hardly find anywhere." In June 2005, Mr. B. M. Beckeh, Global Safety Manager with Shell Company, participated the inspection himself and then said that they were surprised by the result done SINOTRANS Shell Project Team and the team is an excellent logistics service provider in the world. SINOTRANS Shell Project Team sets up a harmony, smooth and in time communication system with Shell and wins the trust from Shell by offering 'Partnership and Win-win policy" as a standard service model and adapting 'serve the society" as our logistics tenet. While working with Shell, SINOTRANS also establishes its own safety standard: Service Quality First, Profit Second and Safety First, Profit Second. As the change of our management philosophy, SINOTRANS can offer better and efficient logistics services to our clients by considering safety and environment before hand.

Lenovo Group is a leading PC enterprise in China and Asia. Due to the strong competition in PC industry, lowering cost and increasing efficiency made Lenovo Group succeed and expend in the market. In order to raise its competition capability, Lenovo Group first out- sources its finished products warehouse management to 3 party logistics company and turned its emphases to supply chain management, forecast and control. In recent years, whether for finished products or for raw material inventory control, under the condition to guarantee the production and sales on the normal track, Lenovo Group is working on any possible changes in supply chain management in order to expedite the turnover of capital flow, increase the speed of cash flow, lower its inventory and raise it's the efficiency of warehouse in and out as well as transportation.

The cooperation between SINOTRANS Group and Lenovo Group started in 2000. Over years of culture merge and better understanding, Lenovo Group finally chose SINOTRANS Group as its strategic partner for supply chain management and optimization in China area. In August 2003, Lenovo Group and SINOTRANS Group signed Comprehensive Strategic Cooperation Agreement and outsourced its all finished products warehouses in Beijing and Shanghai to SINOTRANS Group. Based on the successful experience of outsourcing its finished products warehouses, in order to further reduce the cost and raise the efficiency of the supply chain, Lenovo Group again chose SINOTRANS to join its VMI (Venders Management Inventory) Project for Beijing and Shanghai factories. Through VMI, Lenovo Group realizes the consolidated control of venders' inventory. SINOTRANS provide not only receiving services from the venders but also information exchange, reporting, track and tracing, and other value added services like labeling, packaging and etc. SINOTRANS also provide all necessary raw materials to Lenovo production line according to the production plan in addition to the satisfaction of the venders' requirements for replenishment lead-time, safety, inventory accuracy, information-exchange and customer services. The implementation of VMI takes place of Lenovo and venders' inventory, lowers the capital tie up for suppliers, enhance the efficiency of Lenovo cash management and optimize its supply chain management.

Of course, Lenovo is not the first company in the world to implement VMI, yet it is one of the first few that successfully implement VMI in China. SINOTRANS, working to satisfy the need of Lenovo, accurately finds its position and plays an excellent role as the 3rd party logistics service provide so that to realize the aim for lowing the cost for Lenovo.

All above-mentioned cases are a few among SINOTRANS' logistics client. The conclusion on any business is the mutual effort of both SINOTRANS and our client. We are very grateful to the trust given by our clients and we will do our utmost to offer better services to our customers.

Conclusion

Dear guests, SINOTRANS Group is continuously working for the needs of our clients and willing to enhance our service capability so as to provide full logistics services. Just as the tenet of SINOTRANS: What we are doing here today and tomorrow is to reduce operating cost for the clients. And we are determined to provide satisfactory logistics service in a safe, prompt, accurate, economical and expedient manner.

Today, I am very glad to have the opportunity to share our ideas with all of you. I hope that in the rapidly growth Chinese logistics market, we can work together with you, the government, the enterprises and the research institutions. In the meantime, I also hope that we have more chances to further exchange our ideas and cooperate with all of you.

Thank you.

In partnership with the China Road Transport Association (CRTA)

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