Zhejiang Int’l Logistics Co., Ltd.
Hangzhou, China Site Visit
October 26, 2012
Mr. Zhu Chunli, Vice General Manager
Zhejiang Int’l Logistics Co., Ltd. was founded in 2005 and is based in Hangzhou, the capital and largest city of the Zhejiang Province. Zhejiang Int’l Logistics is a key logistics provider for the pharmaceutical industry in Zhejiang. It is a wholly-owned subsidiary of Zhejiang Int’l Medicine Co., Ltd. and a member of Zhejiang Int’l Group Co., Ltd., which is listed on the Shenzhen Stock Exchange under ticker symbol 000411.
In 2008, Zhejiang Int’l Logistics was approved and licensed by the Zhejiang government and became the first licensed pharmaceutical logistics provider in Zhejiang.
Its operations performance is 15,000 pieces per day. In 2011, the cargo handled was valued at RMB 20 billion. The logistics center in Hangzhou consists of two warehouses which total 60,000 square meters of space and can store 250,000 pieces. Ten million pieces are handled annually.
In the logistics center, there are 10 small, temperature-controlled warehouses. Some of the warehouses are for goods needing 2-8 degree temperature storage, one is for -20 degree storage and one is for -40 degree storage. The logistics center operates 24/7/365. All goods are to be unloaded within one hour of receipt, 30 minutes for urgent goods, in order to maintain temperature control.
Zhejiang Int’l Logistics operates 20 routes in Hangzhou, 50 routes in the Zhejiang Province and 30 routes to other provinces. The end users/final consignees are medicine stores and hospitals. There are 30,000 end users covered by the business. Zhejiang Int’l Logistics has 30 of its own trucks for distribution and can obtain 100 additional trucks to meet customer demand.
Delivery time is 4-8 hours to end users within Hangzhou, 24 hours to end users in the Zhejiang Province and 48 hours to provinces around Zhejiang. For urgent deliveries, 2 hours within the Hangzhou city area and 4 hours within the Zhejiang Province can be provided.
Regional distribution centers (RDCs) are being built per 80-100 km, to help ensure a strong distribution network. The company’s strategy is to cover all of the hospitals in town in the next two years.
As the first licensed pharmaceutical logistics provider in Zhejiang, adequate systems and IT are key for operations and management. Zhejiang Int’l Logistics has its own IT team. All of the trucks are GPS equipped and have timely temperature control. The system will generate an SMS/text message warning if the temperature goes out of control. There are also printers in the vehicles so temperature records can be printed for end users to check. In addition, RMB 4 million was invested to set up a dispatch center to monitor all of the distribution.
The parent company of the group, Zhejiang Int’l Group Co., Ltd., is a key customer as well as MSD (Merck), Sanofi, and the Zhejiang Medicine Company. Its customer list includes 80% of the top 50 pharmaceutical manufacturers.
As the Chinese government is reforming the health care system, more and more demand for medicine and medical supplies will be transferred from the city to downtown area. The demand for medicine and medical supplies in the downtown area will grow rapidly in the near future.
Zhejiang Int’l Logistics is a key player in Zhejiang for pharmaceutical logistics and will continue to grow as it builds a strong distribution network within the province. It does not plan to expand its distribution network outside of Zhejiang currently, but is open to investors who have interest in pharmaceutical logistics throughout China.
Sources: A&A Primary Research, http://wl.intmedic.com/