Werner Global Logistics Gains a Foothold in China
Juan Bautista, General Manager – China
Chris Xia, Business Development Manager
Founded in 1956, Werner Enterprises has grown from a small trucking company into a large multifaceted logistics provider. Its 2006 revenues were $2.1 billion generating net income of $98.6 million. Werner’s service offering is split between truckload transportation, dedicated contract carriage and logistics. Werner has over 14,000 employees (including over 3,000 non-driver employees) and trucking assets of 8,430 tractors and 24,765 trailers.
Werner Global Logistics (Shanghai) Co., LTD (WGL), a wholly-owned foreign enterprise, was established in 2006 as part of Werner’s expanding logistics operations. WGL entered the Chinese market as a class A licensed freight forwarder, import/export consolidation and logistics operator, and a licensed non-vessel operating common carrier (NVOCC). According to Juan Bautista, WGL’s China general manager, a separate NVOCC license is required for each office in China. In addition, the government requires a $100,000 “Guarantee Bond” to be secured to cover customers in case of bankruptcy.
WGL is managing shipments to and from over 25 different countries for its primary customer base in North America and China. Main services include air and ocean freight forwarding, NVOCC ocean shipping, domestic China distribution, vendor and purchase order management, and supply chain consulting. Approximately 70% of the export volumes are destined to the U.S., 20% are going to Mexico and the balance are going to other worldwide destinations. Most WGL’s 60+ customers are headquartered in North America and are taking advantage of Werner’s services there. Today WGL’s customer base is comprised of primarily small and mid-sized shippers who are taking advantage of WGL’s full service offering including forwarding, NVOCC, customs and overall shipment management.
WGL’s Chinese international transportation management operations consist of its owned Shanghai headquarters office, Shenzhen Branch office and 24 strategic partner offices run by two major international freight forwarding providers. WGL’s Shanghai and Shenzhen offices have a full customer service, operations and administration staff in addition to an IT staff supporting its global transportation management system (TMS) platform. WGL is planning on opening additional branch offices near Qingdao by the end of 2007 and additional branches throughout China and the region in 2008.
Werner Global Logistics Major China International Transportation Management Offices
For domestic China distribution, WGL has partnered with a major Chinese trucking company. The company has six branch offices in Beijing, Guangzhou, Shenyang, Xi’an, Chengdu, Suzhou, and 20 distribution centers in Shanghai, Beijing, Shenyang, Tianjin, Ji’nan, Xi’an, Chengdu, Wuhan, Kunming, Guangzhou, Shenzhen, Wulumuqi, Zhengzhou, Hangzhou, Chongqing, Changsha, Nanchang, Fuzhou, Xiamen and Nanning. This relationship provides WGL with a significant domestic transportation network.
SMART Transportation Management System
To support operations, WGL has made substantial investments in upgrading its proprietary SMART transportation management system with international transportation management functionality. When we visited Werner in Omaha, Nebraska in early 2007, we received a significant demonstration of SMART’s capabilities. It can handle many-to-many transportation network optimization and provides very solid transportation execution and visibility functionality. Therefore, we rank SMART as a tier-one TMS.
WGL has 12 people in IT in Shanghai and has created a new version of SMART (“SMART International”) that can manage international ocean, air and consolidation shipments. The current functionality supports domestic transportation management, freight forwarding and NVOCC operations. Of particular interest are the new enhanced mapping capabilities developed by WGL in SMART to facilitate domestic transportation planning and Chinese distribution.
Product Labeling and Freight Forwarding Case Study
Earlier this year, WGL consulted with one its largest retail transportation management customers in the U.S. to design a solution for one if its vendors, a manufacturer of stuffed animals, in Chengdu, China. Both the retailer and their vendor were looking to improve inventory control and export shipment integrity. WGL developed an improvement plan which included the development of special identification labels to be applied to product prior to ocean container loading, new workflows, and an employee training program for a coordinated implementation.
Today, stuffed animals are transported from the manufacturer to WGL’s Chengdu operation. There the product is labeled and consolidated into full ocean container loads for export from Wai Gao Qiao port in Shanghai. WGL manages the consolidation, labeling, ASN shipment notification to the retailers DC, export documentation preparation and ocean freight forwarding. By working with WGL, the retailer and vendor have seen increased inventory control and accuracy and improved destination distribution.
Werner has its vision set squarely on strategically developing complementary non-asset based logistics operations to meet customers’ global supply chain needs. This has definitely been its approach in developing business in China. As it expands, it will continue to leverage its corporate culture and long-term focused values in developing relationships which provide Werner with significant competitive advantages.
Sources: A&A Primary Research, http://www.werner.com/