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“The connection between Overseas and Chinese Freight Forwarders”

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2 “The connection between Overseas and Chinese Freight Forwarders”

3 As an International Logistics Company What do we think about the fundamentality of a global network? What are the crucial steps in the development of a global logistics company? What are the effects of the financial crisis and how are we facing it?

4 Vanguard Perspective Neutral NVOCC Non Asset Based Ocean Freight Focus 2,400 + employees2,400 + employees Started in 1978Started in 1978 3.2 million CBM ocean export annually3.2 million CBM ocean export annually 1.5 million shipments annually1.5 million shipments annually 250,000 + TEU annually250,000 + TEU annually $ 800 + million annual turnover$ 800 + million annual turnover

5 What is an International Logistics Provider? Non Asset-based Logistics Providers (NVOCC, Freight Forwarder A 3PL performs duties such as quoting, booking, routing, and auditing, but doesn't need to own warehousing facilities, vehicles, aircraft, or any other transportation assets. This type of 3PL may possess only desks, computers, and freight industry expertise. To be useful, this type of provider must show its customers a benefit in financial and operational terms by leveraging exceptional expertise and ability in the areas of operations, negotiations, and customer service in a way that complements its customers' preexisting physical assets.

6 1) Fundamentality of a Global Network Operational and Service Coverage Communication Local Knowledge and expertise Sales and Marketing cooperation Financial Control Brand Identity Common Culture and Vision

7 Types of Logistics Networks Exclusive and Non-Exclusive Independent Networks Wholly-owned Network through “Green- fielding” Wholly-owned Network through Acquisition –Combinations of all above

8 Characteristics of a Chinese Freight Forwarder Regionally Focused Transactional based Labor Intensive Loose Networks Price vs. Value Orientation

9 Pros and Cons of Non-Exclusive Independent Networks Low Cost of EntryLimited to bi-lateral trade Instant AccessLimited Marketing Strength May offer payment guarantee mechanisms No Cultural Cohesion Basic Communication methods Financial Risk Lack of Control PROSCONS

10 Pros and Cons of Exclusive Independent Networks Low Cost of EntryGenerally Limited to bi-lateral trade Instant Access to Local Expertise in Foreign Country Limited Systems Integration Better Financial control due to closer relationship Lack of complete control Enhanced Marketing Strength due to exclusivity Lack of end to end visibility Enhanced Communication relative to non-exclusive networks Deficiencies in performance measurement Limited Cultural Cohesion PROSCONS

11 Pros and Cons of Wholly-Owned Networks (Greenfield and Acquisition) Complete Control throughoutRequires critical mass and/or large pools of investment capital Worldwide ERPHigh cost of IT maintenance and development Financial ControlMust maintain global organizational structure Cohesive Culture – Shared ValuesCohesive culture is not a given Sales and Marketing Muscle Multi-lateral offerings PROSCONS

12 Vanguard’s Development TODAY

13 Global Network Vanguard owned offices Agents

14 2) Development of a global logistics company? Strategic Vision and Development Plans Strong Sales Organization Understanding, Anticipating and Adapting to Customer Needs Defined Services Market Recognition Management Depth Global Reach IT Capabilities Relationship management

15 Regional Transactional Multinational Transactional Global Transactional Corporate Apex Apex MoveCargo Move cargo / Online Transaction Tailor freight movement Customized IT/ Integration Relationship management Commercial Development

16 Getting There: Development Steps Extended Collaboration –Planning –Management –Customization and Execution –Performance Measurement Technology –Visibility Tools –Web-enabled Communication –Transportation Management Systems –Warehouse Management Systems

17 Need for continued Development A: Lack of Ongoing Improvements in Service Offerings B: Lack of Strategic Management Skills C: Not Keeping up with Advances in IT D: Lack of Consultative, Knowledge-based Skills E: Lack of Global Capabilities Source: 3PL: Results and Findings of the 2007 11th Annual Study (2007)

18 3) Effects of Financial Crisis Consumer Sentiment –Global Trade Those the serve Global Trade

19 Financial Crisis – Immediate Response Non-Asset Based Logistics Providers Cost Control Tighten Credit Right - Size Continued and Intensified Sales Efforts

20 Impact on Non-Asset Logistics Providers Orders smaller Diversified Services Margins Potential for further outsourcing of logistics functions to Logistics Providers Shaking out of marginal players

21 Source: 3PL: Results and Findings of the 2007 11th Annual Study (2007) Current vs. expected expenditures directed to outsourcing as percentages of total logistics expenditures 2007 vs. 2010-12 Expenditures


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