A&A Sinotrans Site Visit 6-2009

Sinotrans Integrated Logistics Continues its Expansion in China

Shanghai, China

June 15, 2009

Eric Xiang

Key Personnel:

Li Renzhi, Deputy General Manager

Chen Aijun, Manager

Beijing-based Sinotrans Ltd. had gross revenues of $5.7 billion in 2008. It has expanded its Sinotrans Integrated Logistics (SIL) business unit in Shanghai by operating three main regional distribution centers (RDCs). One is in Songjiang District, another in Putuo District, and the one we visited is in Fengxian District. The Songjiang warehouse is around 10,000 SQM and consists of mainly high-tech products. The Putuo warehouse is around 17,000 SQM and handles products distributed within Shanghai. The Fengxian warehouse is 48,000 SQM and handles product distribution throughout China. SIL currently has 280 employees in Shanghai with 130 of them in Fengxian. It plans to increase its staff to over 600 employees in the near term.

Sinotrans Shanghai is in the process of completing a six warehouse campus in Fengxian totaling 125,000 SQM. The two largest warehouses started operating in October 2008–Warehouse 1 and Warehouse 2. Each warehouse is just under 24,000 SQM and has four subdivisions. Each subdivision is about 5,000 to 6,000 SQM. The other four warehouses–Warehouse 3, 4, 5 and 6–each have a 1.45 meter high loading dock on one side to match container and large truck chassis. Each loading dock has 18 doors. The height inside the warehouse is 9.5 meters and product can be loaded 5-high in each rack. The warehouse is equipped with U.S. standard fire fighting equipment and has 24-hour closed-circuit television (CCTV) control. A general layout of the six warehouse campus is shown in Figure 1 below.

Figure 1 - Six Warehouse Campus in Fengxian

Key customers of SIL include fast moving consumer goods companies like Auchan, Kraft, Metro, Robust, and Uni-President; automotive companies like Cooper Tires, Goodyear, and Michelin; and high-tech companies like BenQ, Dell, Hewlett-Packard, and Tsinghua University. SIL is also developing customers in the cold chain and chemicals industries.

The Fengxian warehouse is near the Waigaoqiao Free Trade Zone, Yangshan Port area and Pu Dong Airport, making it convenient for export consolidation. SIL has plans to make this a bonded warehouse in the future. A map of all SIL warehouses in Fengxian is shown in Figure 2 below.

Figure 2 - SIL Warehouses in Fengxian

SIL has around 100 trucks (each 4.2 to 9.6 meters long) in Shanghai. Twenty-five of them are in Fengxian. SIL also manages transportation from Shanghai to Beijing and Guangzhou with subcontractors.

Sinotrans is a leading logistics provider for air, ocean, and inland transportation in China and continues to invest in the development of Integrated Logistics. We envision that SIL will continue to take the steps to develop into a leading integrated transportation management and value-added warehousing third-party logistics provider in China.

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Warehouse Campus, Auchan, Kraft, Metro, Uni-President, Cooper Tires, Goodyear, Michelin, BenQ, Dell, Hewlett-Packard, Tsinghua University, Waigaoqiao Free Trade Zone, Yangshan Port, Pu Dong Airport...