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The connection between Overseas and Chinese
Freight Forwarders
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As an International Logistics Company

• What do we think about the fundamentality of a
  global network?
• What are the crucial steps in the development of
  a global logistics company?
• What are the effects of the financial crisis and
  how are we facing it?

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Vanguard Perspective

• Neutral NVOCC
• Non Asset Based
• Ocean Freight Focus
• 2,400 employees
• Started in 1978
• 3.2 million CBM ocean export annually
• 1.5 million shipments annually
• 250,000 TEU annually
• 800 million annual turnover

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What is an International Logistics Provider?

• Non Asset-based Logistics Providers (NVOCC,
  Freight Forwarder
• A 3PL performs duties such as quoting, booking,
  routing, and auditing, but doesn't need to own
  warehousing facilities, vehicles, aircraft, or
  any other transportation assets. This type of 3PL
  may possess only desks, computers, and freight
  industry expertise.
• To be useful, this type of provider must show its
  customers a benefit in financial and operational
  terms by leveraging exceptional expertise and
  ability in the areas of operations, negotiations,
  and customer service in a way that complements
  its customers' preexisting physical assets.

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1) Fundamentality of a Global Network

• Operational and Service Coverage
• Communication
• Local Knowledge and expertise
• Sales and Marketing cooperation
• Financial Control
• Brand Identity
• Common Culture and Vision

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Types of Logistics Networks

• Exclusive and Non-Exclusive Independent Networks
• Wholly-owned Network through Green-fielding
• Wholly-owned Network through Acquisition
• Combinations of all above

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Characteristics of a Chinese Freight Forwarder

• Regionally Focused
• Transactional based
• Labor Intensive
• Loose Networks
• Price vs. Value Orientation

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Pros and Cons of Non-Exclusive Independent
Networks
PROS
CONS
Low Cost of Entry Limited to bi-lateral trade
Instant Access Limited Marketing Strength
May offer payment guarantee mechanisms No Cultural Cohesion
Basic Communication methods
Financial Risk
Lack of Control
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Pros and Cons of Exclusive Independent Networks
PROS
CONS
Low Cost of Entry Generally Limited to bi-lateral trade
Instant Access to Local Expertise in Foreign Country Limited Systems Integration
Better Financial control due to closer relationship Lack of complete control
Enhanced Marketing Strength due to exclusivity Lack of end to end visibility
Enhanced Communication relative to non-exclusive networks Deficiencies in performance measurement
Limited Cultural Cohesion
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Pros and Cons of Wholly-Owned Networks
(Greenfield and Acquisition)
PROS
CONS
Complete Control throughout Requires critical mass and/or large pools of investment capital
Worldwide ERP High cost of IT maintenance and development
Financial Control Must maintain global organizational structure
Cohesive Culture Shared Values Cohesive culture is not a given
Sales and Marketing Muscle
Multi-lateral offerings
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Vanguards Development
TODAY

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Global Network

• Vanguard owned offices
• Agents

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2) Development of a global logistics company?

• Strategic Vision and Development Plans
• Strong Sales Organization
• Understanding, Anticipating and Adapting to
  Customer Needs
• Defined Services
• Market Recognition
• Management Depth
• Global Reach
• IT Capabilities
• Relationship management

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Commercial Development
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Getting There Development Steps

• Extended Collaboration
• Planning
• Management
• Customization and Execution
• Performance Measurement
• Technology
• Visibility Tools
• Web-enabled Communication
• Transportation Management Systems
• Warehouse Management Systems

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Need for continued Development
A Lack of Ongoing Improvements in Service
Offerings B Lack of Strategic Management
Skills C Not Keeping up with Advances in IT D
Lack of Consultative, Knowledge-based Skills E
Lack of Global Capabilities
Source 3PL Results and Findings of the 2007
11th Annual Study (2007)
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3) Effects of Financial Crisis

• Consumer Sentiment
• Global Trade
• Those the serve Global Trade

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Financial Crisis Immediate ResponseNon-Asset
Based Logistics Providers

• Cost Control
• Tighten Credit
• Right - Size
• Continued and Intensified Sales Efforts

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Impact on Non-Asset Logistics Providers

• Orders smaller
• Diversified Services
• Margins
• Potential for further outsourcing of logistics
  functions to Logistics Providers
• Shaking out of marginal players

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Source 3PL Results and Findings of the 2007
11th Annual Study (2007)
Expenditures

• Current vs. expected expenditures directed to
  outsourcing as percentages of total logistics
  expenditures
• 2007 vs. 2010-12

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