Menlo Refines its China 3PL Model and Gains Business
Shanghai, China Site Visit
February 20, 2012
By
Evan Armstrong
Key Personnel:
Bob Bassett, Vice President of Sales and Marketing
Leong Choong Cheng, Senior Director of Business Development, North Asia
Jack Wu, Operations Manager
Steven Chen, Manager of Quality, Allison Transmission Asia Pacific Operations
Menlo China Overview
Menlo Worldwide Logistics generated gross revenue of $1.5 billion and net revenue of $572 million in 2010. It is on track to grow by over 6% in 2011 driving its gross revenue to approximately $1.6 billion. Menlo’s global staff of approximately 6,500 manages operations in 20 countries on five continents. Menlo’s expanding operational footprint has moved it into a select group of third-party logistics providers (3PLs) which we classify as tier-one major market 3PLs. Globally, HP is Menlo’s top customer, followed by Navistar, and the DTCI (Defense Transportation Coordination Initiative). It was also awarded a significant contract from GM to manage GM’s global spare parts and aftermarket accessories logistics operations in late 2011.
We recently had the opportunity to get updated on Menlo’s Chinese operations during a visit to Shanghai. Menlo has over 47 years of experience in China. In 1962, it established a Hong Kong office and in 1999 Menlo established a wholly-owned subsidiary, Shanghai-Menlo Worldwide Logistics (Shanghai) Company Ltd., in the Waigaoqiao (WGQ) Free Trade Zone (FTZ). In 2006, Menlo formed a wholly-owned foreign enterprise (WOFE) allowing it to provide domestic warehousing and transportation services. In 2007, Menlo greatly expanded its domestic mainland China supply chain management network through the acquisition of Shanghai based Chic Logistics. Chic was a significant domestic Chinese provider of non-asset based transportation management and value-added warehousing services. In 2009, Menlo rebranded the Menlo/Chic China operations as Menlo Worldwide Logistics, North Asia.
Today, Menlo North Asia is operated by a staff of 1,000. According to Menlo, it has refined its China 3PL model and marketing efforts to focus less on competing with local Chinese 3PLs for tactical logistics business and is concentrating on working strategically with domestic and multinational companies needing more complex logistics solutions. It has been using Menlo’s consulting services such as distribution network modeling as an entrée to developing new 3PL business. Key Menlo China accounts include: B&Q, Eaton, GM, Mary Kay, New Era, P&G, Powerwave, Shanxi Coking Group, and Unilever.
Menlo is a lead logistics provider (LLP) for Mary Kay in China managing the transportation, value-added warehousing, and sales counter operations for Mary Kay’s domestic manufacturing to direct sales channel. Menlo is also working with Eaton in North China performing value-added warehousing and distribution services for Eaton’s uninterrupted power supply products. It is also working with Shanxi Coking Group managing coal transportation in Shanxi Province in Western China. Powerwave is a global Menlo customer. In China, Menlo is managing Powerwave’s warehousing and domestic finished goods distribution.
For future growth, Menlo China is targeting customers in the following vertical industries and channels:
- Volume/Network Segments: FMCG, Chemical & Industrial
- High Value/Growth Segments: High Tech, Automotive Parts, Factory Logistics and 4PL/LLP & Supply Chain consultancy
- Direct Sales/Online Retail
- Bonded/Regional Hub
- Energy Logistics
Menlo recently gained several significant pieces of business in China including apparel and accessories distributor New Era. New Era has a contract with the United States based Major League Baseball and National Football Leagues to merchandise and distribute apparel and accessory items. New Era, in turn, contracted with Menlo to manage its domestic China value-added warehousing and distribution needs including returns processing. Menlo’s New Era operation is being managed centrally from its Hong Kong logistics hub.
Menlo China’s primarily non-asset based transportation management operation – with a moderate size fleet of over 60 self-owned trucks – is managing approximately 90,000 shipments per month using a regionalized hub and spoke network and utilizes over 1,200 trucks mainly from carrier partners on a daily basis for its transportation operation throughout China. The transport network has a centralized management and operations office in Shanghai with regional branches in Guangzhou, Beijing-Tianjin, Chengdu, Xian, and Wuhan. It is coordinating pickup and delivery services in over 110 major cities and is handling over 1 million metric tons annually.
Menlo’s transportation management services include: local distribution, long haul truckload and less than truckload shipment management, licensed Dangerous Goods transportation, and multimodal domestic freight forwarding using truck, air, rail, sea and barge transportation modes.
Main ground transport lanes include points to and from Shanghai, Guangzhou, and Beijing-Tianjin. Major one-way lanes include points from Shanghai, Guangzhou, Beijing-Tianjin to Xian, Chengdu, Wuhan, Shenyang, and from Xian to Urumqi. The map below highlights the major transportation network flows between Menlo’s hubs. Solid lines illustrate daily linehaul runs and the dashed lines show less than daily linehaul dispatches.
Menlo China Transportation Management Network Hubs and Major Shipment Flows
