Shenzhen South-china International Logistics Centre: Overview

Presented by

Shenzhen SILC-Vanquish Logistics Co Ltd.

Presentation Agenda

• Company Background

• SILC: Introduction and Location

• Strategic Advantages

• Services Overview– Empty Container Depot

– Cargo Inter-change

– Bonded Warehouse

– Logistics Value-added Services

– Green Lane and Green Express

• Case Studies

Company Background

• SILC-Vanquish Logistics Co. Ltd. (龍卓物流有限公司)

• Established in Apr 2007

• A China-Foreign Joint Venture owned by Vanquish Holdings Ltd and South-China International Logistics Co Ltd.

Vanquish Southern China Co. Ltd. South-China International Logistics Co. Ltd.

Shenzhen SILC-Vanquish

Logistics Company Limited

Shenzhen SILC-Vanquish

Logistics Company Limited

50% 50%

(China-Foreign JV)

Company Background

• Vanquish Holdings Limited– A HK-based company formed in 1990 with major businesses in

cross-boundary road transportation, warehousing and freight forwarding.

– Provides expertise and personnel in warehousing management, new project development and client negotiations.

• South-China International Logistics Co Ltd.– A fully-owned subsidiary of Shenzhen International Holdings

(SZIHL), a HK-listed company (SEHK: 0152) with Shenzhen Municipal Government as the biggest shareholder

– SZIHL focuses on investment in logistics-related and road infrastructure projects

– Owns and manages South-China Int’l Logistics Centre (SILC)

SILC: Introduction

• Located in Longhua, Shenzhen (龍華區), near Meilin Customs (35 minutes from Huanggang)

• One of the seven logistics parks under Shenzhen Municipal Govt’s Outline Plan

• Total Development Area: 650,000 m2

• Total Investment: RMB $900m

SILC: Location and Transportation Network

Dist (km)

Time (min)

Huanggang 15 35

Shekou 20 40

Yantian 25 45

SZ Airport 28 55

Da Chan Bay 30 60

Kwai Chung Terminal

45 75

HKIA 60 90

SILC: Facilities Map

Meiguan Expressway

Container Depot

Truck Park (Cargo Inter-

change and Green Lane)

Bonded Warehouses

SILC Entrance

China Customs and CIQ Offices

Strategic Advantages

• Located in the central of Shenzhen, well-connected to air and sea port facilities in Hong Kong and Shenzhen, boundary checkpoints and industrial hinterland by expressway network

• Hence positioned itself as an “Inland Logistics Port” supporting activities in the vicinity

• The first operator of “Green Lane”, a simplified cross-boundary road transportation mechanism for cargo movement.

Services: Empty Container Depot

• Total area: 100,000 m2

• Serving more than 20 shipping lines

• Customers can pick up empty containers for both Hong Kong and Shenzhen shipments.

Services: Cargo Inter-change

• Total operating area: 30,000 m2

• Allowing cargo carried by cross-boundary truck be transferred into a local truck for onward delivery (to inland provinces)

• Sole operator authorized by China Custom for such function

Services: Bonded Warehouse

• Total Development Area: 250,000 m2.

• Currently Available Warehouse Area: 118,000 m2

• Total Truck Dock for Load and Unloading: 500

• Provides Export Supervised and Import Bonded Warehouse services under Custom control

• Integrated Warehouse Management Services:– Putaway/Storage

– Inventory Management

– Order Fulfillment/Picking

– Packing and Value-added Services

• Online Warehouse Management System (WMS) allows 24/7, real-time monitoring of inventory

Services: Bonded Warehouse (cont’d)

• Export Supervised Warehouse (出口監管倉)

– Cargo entered into warehouse is “deemed export”

– Hence allow immediate processing of Tax Rebate and FOREX collection

– Improves cash flow and raw materials turn-around for factories

– Maximum storage period: 1 year

– Suitable for:• Buyer Consolidation

• Regional Distribution Centre for foreign buyers

Services: Bonded Warehouse (cont’d)

• Import Bonded Warehouse (入口保税倉)

– Cargo stored is regarded as not yet entered into PRC (for tax and regulatory purposes)

– Deferral of import duties and VAT (until cargo release from the warehouse)

– Re-export of the Cargo can be arranged

– Maximum storage period: 2 years

Services: Bonded Warehouse (cont’d)

• Multi Country Consolidation (MCC)

– Mix-load of overseas goods and local goods for the purposes of Re-export.

– Overseas goods are imported under BONDED status –no duties or VAT due

– Local goods entered into warehouse are deemed export – factories can process tax rebate and forex collection immediately

– Allow value-added services to be performed in the warehouse on 24/7 basis

– Maximum storage period: 1 year

Services: Logistics Value-added Services

• Services that complement customers’warehousing, distribution and fulfillment needs

• Provided the operation does not alter the nature of the goods (for example, from unfinished goods to finished goods)

• Possibilities: Cargo Inspection, Pick and Pack, Co-packing, Relabeling, Shrink-wrapping

Services: Green Lane and Green Express

• Part of the “Rapid Cross-Boundary Clearance” (跨境快速通關) initiatives by China Custom

• Shifting of Custom function at boundary checkpoint to stationed custom at SILC

• Make use of electronic manifest declaration and electronic truck surveillance (GPS and e-seal)

• Green Lane for FCL operation and Green Express for Loose Cargo operation

Cross-boundary Road Transportation: Current Practices

Factory

CB Container Tractor

HKMainland

Wastage (Potential Savings)

• Time wastage at check-point due to congestion

• Empty container / Ton truck trip

• Wastage on truck capacity due to exclusive ton truck operation

• Hkg CB Truck appointed all the way � increase trucking cost

(Laden-in / empty-out)

(Empty-in / laden-out)

CB Trucks stop & queue at Huanggang check-point to perform customs procedure

CB Ton Truck (Laden-in / empty-out)

(Empty-in / laden-out)

Exclusive Truck for small lot of shipment

Green Lane – Basic Concept

Green Lane TruckLocal Truck

Hong Kong

Container TerminalsMainland Factories

Electronic Surveillance:

• E-Seal

• Global Positioning System (GPS)

• Real-time Track & Trace

No need to

stop at

Huanggang

Open to the

whole tractor

community

Applies to

FCL cargo to

and from HK

Terminals

Green Express- Basic Concept

Mainland

Shippers/ Factories

Airport Cargo Terminal

Designated Cargo

Processing Point

Electronic Surveillance:

• E-Seal

• Global Positioning System (GPS)

• Real-time Track & Trace

Green Lane Truck Local Truck

No need to

stop at

Huanggang

Hub-to-Hub

Direct

Service

Cargo

Consolidation

saves cost

Direct Custom Transit

(直轉轉關模式)

Green Lane and Green Express: Differences

Green Lane Phase 1 Phase 2 (Green Express)

FCL Cargo LCL Cargo

Fixed Cargo Acceptance/Delivery Location- HK Container Terminals

Multiple Cargo Pick-up/Drop-off Points in Hong Kong

Target mainly sea-bound containersTarget Air Cargo and other cross-boundary loose cargo

Pre-assigned Operator only (no need for pre-assigned truck)

Pre-assigned Operator, Pre-assigned Truck

Scheme kicked off in June 2006 Service began in Oct 2008

Green Lane: Benefits

• Leveraging Lower Cost Mainland Truck for part of the journey

• Materialize Cross-Boundary Laden-in, Laden-out model – eliminates empty container reposition trip

• Bypass the congested boundary checkpoint at Huanggang – Time Saving

Green Express –Benefits

• Eliminate the need for chartered, dedicated cross-boundary truck

• Further cost savings through cargo consolidation – share the transportation cost with other shippers

• Fixed schedule, fixed route service ensure convenience and timeliness of cargo delivery

• Simple tiered pricing scheme based on chargeable weights.

Case Study 1: Logistics VAS

• Client: A toy distributor

• Services used: Multi-Country Consolidation + Value-added Services

• Description: Goods from both overseas and local factories are assembled into a floor display unit for direct shipment to retail stores overseas

Case Study 1 (cont’d)Assembly of Floor Display Unit Co-packing of Products

Warehouse Storage

Finished Products on Display

Case Study 2: Inland Gate Service

• Client: Hong Kong Container Terminals

• Services used: Empty Container Depot and Green Lane

• Description:

– Customer pick up empty containers at SILC and transport to mainland factories to be filled

– Customer return laden containers at SILC – deemed received by HK terminal (with terminal receipt issued)

– Laden Container then transported back to HK for export by HK Terminal via Green Lane

Case Study 2 (cont’d)

GREEN

LANE

Laden Out

Empty InConsignee

Import

Empty Out

Export

Mainland

HKLaden In

Laden In

Inland Truck (Optional)

Shipper

Laden Out

Huanggang

Inland Truck (Optional)

Hkg Contr Terminals Inland Gate

CB Truck

MTL, HIT,

Cosco HIT

THANK YOU!