Lichen Logistics Co., Ltd. Looks for Continued International Expansion
Linyi, China Site Visit
August 7, 2014
Mr. Shu Qingjun, Vice General Manager, Board Secretary
Lichen Logistics Overview
Established in 2002, Lichen Logistics is headquartered in Linyi, Shandong Province, China. It has over 300 employees working throughout the company, including its branch offices in Jinan, Qingdao, Guangzhou, Hong Kong, and Singapore.
Lichen Logistics entered the domestic market providing warehousing and transportation management services. In Linyi, Lichen Logistics has a modern 260,000 SQM warehouse facility and a fleet of 35 trucks. As a third-party logistics provider, Lichen Logistics has built a solid customer base by offering value-added warehousing and distribution, domestic and international transportation management, and other value-added services to customers. Its customer list includes many well-known manufacturers such as Volvo and Sinopec.
Key Customer Services
In China, Volvo has a joint venture company with Shandong Lingong Group. Lichen Logistics is the key logistics service provider for Volvo in Linyi and provides procurement, supervision, customs clearance, bonded warehousing including sorting and packing, distribution and other integrated logistics services.
Lichen Logistics has branch office in Jinan. Through the Jinan branch office, it serves Sinotruk, a manufacturer of cargo trucks and semi-tractor trucks, with an onsite operations team that provides integrated logistics services.
Sinopec, one of the major State-Owned petroleum energy and chemicals companies in China, is another key account for Lichen Logistics. Lichen Logistics operates a warehouse for Sinopec in Linyi.
A new customer, China National Catton Reserves Corporation (CNCRC) has been using Lichen Logistics for several months. Lichen arranges trucking service from Xinjiang province to Linyi for CNCRC and warehouse storage in Linyi.
Supply Chain Finance
With good customer relationships, a growing reputation in the industry, and solid financials, Lichen Logistics has developed a Supply Chain Finance service line. For example, if one of Lichen’s customer’s needs to procure steel with a cargo value of 10 million RMB from a steel manufacturer, but the buyer only has 5 million RMB for cash for payment, Lichen Logistics can work with the buyer to apply for 10 million RMB in credit from the bank with only a 5 million RMB deposit. The seller (steel manufacturer) in-turn will sign the contract and give the buyer a discount making it easy for the bank to approve the credit which is placed as cargo under Lichen Logistics’ control. This approach makes Supply Chain Finance a win-win situation for the four parties. Of course, this helps Lichen Logistics secure more business and benefit from a stream of related service charges.
Current Business and Expansion Plans
Outside of domestic warehousing and distribution, Lichen Logistics has its own offices in Hong Kong and Singapore. The two overseas offices focus on international purchasing and the financial service platform. They provide finance services, bonded warehousing, and international freight forwarding for domestic manufacturers and global trading businesses.
A supply chain manager from the United States, Waitex Group Of Companies, is a significant shareholder in Lichen Logistics. Waitex has helped Lichen Logistics develop professional management skills and an advanced business strategy. After years of growth and development, Lichen Logistics began an IPO process two years ago. However, the IPO was held up due to government procedures. According to Mr. Shu Qingjun, they will get back to the IPO process when the time is right.
Lichen Logistics has an opportunity to open more offices in mainland China, but it remains cautious of domestic network expansion. According to Mr. Shu Qingjun, Lichen Logistics does have plan to set up its own offices in Brazil and Europe since most of its customers have business between China, Brazil and Europe. He emphasized that Lichen Logistics’ customers have a strong interest in cooperating with them overseas.