Brief logistics profile of Vietnam Shipping _VNSVNS logistics solution for textile & garment Scopes of service and pricing

Our background & challengesOur missionOur total logistics solution

Our background & challenges LOGISTICS VIETNAM, as third party logistics service provider, is a

division of Viet Nam Shipping Services Corporation. For more information about Viet Nam Shipping Services Corporation, please visit our website at www.vietnam-ship.com

Vietnam market is getting more and more competitive and will be an important hub for high value products which demands professional logistics service provider who can offer solution for the conflicting concept of “lower cost with higher satisfaction” to customer. Can it be true ?

In the vanguard of this new trend and concept, We will build up a “logistics home” for our customer and together with logistics partner we can make it happen!

We aim to offer a value-added service of differentiation to ensure that we are the company you can be proud to support

Our mission Companies are increasingly focusing on their core business. That is why

there are more and more companies who are outsourcing their logistics services.

As a non-asset based logistics service provider and together with customer, we create and manage tailor-made logistics solutions for the most effective & efficiency movement of materials from supplier to consumer.

We strive for leanness, agility, and integration to keep our customer’s logistics system improving. That is our contribution to your success.

The logistics house

“Right goods/services, in the right quantity, to the right place, at the right time and with the right price”

Distribution logisticsProcurement logistics

SuppliersOperation Customers

• Transportation( by sea, land, air…)• Inventory • Order processing• Purchasing• Packaging• Warehousing• Materials handling• Information system

• Transportation( by sea, land, air…)• Inventory• Order processing• Distribution• Packaging• Warehousing/ DC• Materials handling• Information system

Total logistics system

Procurement LogisticsWe provide the purchasing order management; cargo consolidation from different suppliers in Vietnam and stored into our local warehouse including value added services (price tagging, bar-coding…), quality control Inventory management, customs clearance…and shipping to customers nominated destinations

SUPPLIERS CUSTOMERS CONSUMERS

Our upstream logistics management

Warehouse

Pallet Storage

Receive Putaway Store Pick ShipReceive

Warehouse

Pallet Storage

Receive Putaway Store Pick ShipReceive(1)

Receiving (2)

Put-away (3) Storage

(4) Order Picking

(5) Shipping

VNS WAREHOUSE

Warehouse operation

? 1-Receiving Transport scheduling Unloading vehicle Inspection for damage Comparing with P/O

2-Put-away Identify different items Identify location for storage Monitoring product Updating record into software

3-StorageEquipmentStock location

Warehouse operation…

? 4-Order picking Pick slip Walk & pick Batch picking

5-Shipping Pre-shipping

Packing Labeling Staging

ShippingShipping schedulingLoading vehicleBill of ladingUpdating record

Warehouse operation…

Distribution Logistics

We provide the services of cargo consolidation from different countries into Vietnam, customs clearance, stored into our local warehouse including value added services (price tagging, bar-coding…), quality control inventory management and national-wide transportation to nominated retailers, consumers…

CONSUMERSCUSTOMERSSUPPLIERS

Our downstream logistics management

Using warehouse to reduce transport cost: consolidation & break-bulk

Using warehouse to reduce logistics cost in transactions

National Distribution Network Services

VNS business model VNS total logistics solution VNS logistics functions VNS warehouse solution VNS transport solution

VNSCustomersSRM CRM

VNSSuppliers

VNS Strategy

VNSExecutive Team

HRM

VNS Production

VNS Internal Supply Chain

Supplier Relationship Management Customer Relationship Management

What VNS logistics solution aims to ?

1-Customers' requirements Customer Satisfaction

2-Efficient, Effective More profit by reduced cost of materials, inventory and freight

The application of logistics enables a greater efficiency of movements with an appropriate choice of modes, terminals, routes and scheduling. The implied purpose of logistics is to make available goods, raw materials and commodities, fulfilling four major requirements: Order fulfillment: Implies that the transaction between the supplier and the customer is

being satisfied with the specified product provided in the agreed quantity Delivery fulfillment: The order must also be delivered at the right location and at the

right time. Both involve the scheduling of transportation and freight distribution activities. Quality fulfillment: The order must be provided intact (in good condition), implying that

any form of damage must be avoided during transport and delivery. This is particularly important for products that are fragile, perishable or sensitive to temperature fluctuations.

Cost fulfillment: The final costs of the order, including manufacturing and distribution costs, must be competitive. Otherwise, other options will be considered.

InventoryWhen to order

How much to orderJust-in-time

InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

DistributionAutomated

WarehousingStorage

DistributionAutomated

Order ProcessingReceivedProcessedShipped

Order ProcessingReceivedProcessedShipped

VNSLogistics FunctionsTransportation Rail,

Truck, Water, Pipeline, Air, Intermodal

How VNS adds values into customers’ supply chain

VNS aims to add a multidimensional value- added activities into our customers’ supply chain including production, location, time and control of elements of the supply chain for the effective & efficient logistics:Production. Derived from the improved efficiency of manufacturing with

appropriate shipment size, packaging and inventory levels. Thus, logistics contributes to the reduction of production costs by streamlining the supply chain.

Location. Derived from taking better advantage of various locations, implying expanded markets and lower distribution costs.

Time. Derived from having goods and services available when required along the supply chain with better inventory and transportation management, and the strategic location of goods and services.

Control. Derived from controlling most, if not all, the stages along the supply chain, from production to distribution. This enables better marketing and demand response, thus anticipating flows and allocating distribution resources accordingly.

Our customers supply chain

Warehouse operations Warehouse capacity Warehouse Import/Export SOP

Receiving• Schedule carrier• Unload vehicle• Inspect for damage• Compare to P/O

Put-away

• Identify product

• Identify storage location

• Update records

Storage

• Equipment

• Stock location

Order picking

• Information (pick slip)

• Walk & pick

• Batch picking

Pre-shipping

• Packaging

• Labeling

• staging

Shipping

• Schedule carrier

• Load vehicle

• Bill of lading

• Record update

INPUT

OUTPUT

Wa

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se

In

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roc

es

sW

are

ho

us

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utb

ou

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P

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VNSWarehouseOperationprocess

Road to VNS_TBS warehouse

Road to VNS_TBS warehouse

HCM cityHCM city

Transport role in the logistics system VNS transport performance

VNS 2011 total volume VNS 2009-2010-2011 total sea transport performance VNS 2009-2010-2011 sea transport for garment & textile VNS 2009-2010-2011 total air transport performance VNS 2009-2010-2011 air transport for garment & textile VNS some customers for textile & garment

VNS consolidation solution VNS Sea-Air solution VNS GOH handling

? Transportation serves as a ‘bridge’ over the buyer-seller gap and plays an most

important role in the total logistics costs in most of supply chain due to: It absorbs, on average, about 40% to 50% of the organization's overall logistics costs. Transportation is the physical link connecting a company's customers, raw materials

suppliers, plants, warehouses and distribution channel. Transportation system is physically composed of the networks over which freight is

moved and of the equipment used to transport freight. The system includes vehicles, ' terminals, pipes, highways, waterways, airways, railroad tracks, etc

Therefore, the effective management of this component of logistics is an extremely important one to reduce logistics cost for our customers

VNS can bring benefits to customers for the “economies of scale” due to: Our advantage of leveraged buying power Single point of contact to different top-class preferred carriers with ample routing sailing

schedule Qualified staff with effective & efficient standard operation procedures Different transport solution such as consolidation, break-bulk, sea-air, multi-model …

Transport role in the logistics system

VNStransport solutionIn the

SC

VNStransport solutionIn the

SC

- Source: Adapted from P.O Roberts, Supply Chain Management: New Directions for Developing Economies, http://www.worldbank.org/html/fpd/transport/ports/trf_docs/new_dir.pdf- http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/worldlogisticscosts.html

Logistics Expenditures

VNS transport performance

VNS 2011 export performance to USA by commodities(From January to June 2011)

VNS total sea export performance_2009-2010-2011

Unit: teus

VNS sea performance of garment & textile to USA(2009-2010-2011)

VNS total air export performance_2009-2010-2011

Unit: kg

VNS air performance of garment & textile to USA(2009-2010-2011)

Some of VNS’ customer for garment & textile to USA

? We offer LCL consolidation services to consolidate cargo from different suppliers

when your cargo is not enough for a FCL_full container load to make sure your shipment is moved without delay and getting other benefists: Direct or maximum-one-stop routings to ensure reliable, fast shipments Minimisation of cargo-damage risk through reduced trans-loading Single point of contact for all your global LCL needs Improve overall service while keeping costs contained

VNS Consolidation solution

Scenario 1: The firms performs their own logistics functions

Scenario 2: VNS as a 3PL takes care of both suppliers’ logistics functions

Supplier 1

Supplier 2

Supplier 1

Supplier 2

2 warehouses2 separate distribution networks

1 warehouse1 distribution networkVNS as 3PL

LCL shipper LCL shipper LCL shipperLCL shipper LCL shipper

VNS as NVOCC

Bill of ladingLess than container load (LCL) shipments Full container

Seafreight consolidation model at the loading port

VNS as NVOCC…

Consignee Consignee ConsigneeConsignee Consignee

Less than container load (LCL) shipments

Full container Bill of lading

Consolidation &Break-bulk

VNS Sea-Air solution helps to answer our customer question for cargo from Vietnam to USA that airfreight is too expensive but seafreight is too slow and what is the solution? Especially, It is sensitive to fashion logistics in a peak season!

If our customers are finding their airfreight rates too high for long-haul shipments, but need faster transport than seafreight alone, consider a careful blend of the two.

Sea-Air traffic combines the economy of the sea with the speed of the air to give you a cost-effective solution. This fusion of transport modes enables you to send goods from Asia to Europe, North and South America, or Africa within 2-3 weeks.

We strongly recommend this sea-air transport model to our customer in case their goods are cost-sensitive but not absolutely urgent, then this could be a right solution as we make sure the fashion goods will be arrived at the right shop in the right time and at the right cost !

VNS Sea-and-Air solution

Example of VNS Sea-Air model via Dubai(Vietnam to USA)

Sea-Air service, a combined Sea and Air transport when properly handled is a preferable multi-modal transport that offers cost effective and time sensitive solutions, which brings two of the best advantages of air and sea freight together in one service: SAVINGS & SPEED

Sea-Air is usually presented as alternative solution between ocean and air in the logistics pipeline. It is more cost-effective than pure airfreight by 30-40% and quicker than ocean alone by approximately 40% in transit time.

There are many instances when Sea-Air can provide advantages as an alternative to the classic ocean or air transport mode: When ocean is not an option any more due to the tight delivery in term of

timeframe. When looking for a greater flexibility in the transport process to ensure the cost vs.

lead-time ratio is optimal at all times (Just-in-time) When airfreight is viewed as the immediate choice, yet may not always be needed

and becomes a “comfort” solution When product value does not support to cost of airfreight When Garment on Hanger (GoH) is carried via airfreight When looking for a solution to reduce inventory carrying cost When capacity becomes constrained from a specific origin or region, especially in a

peak season

Sea-Air solution should be created on the followings requirements: Total control over the Sea-Air operations from origin through the trans-shipment point

and ultimately to the final destination. Up-to-date information and excellent handling at trans-shipment hub is very important.

Single HAWB : combined transport document Single rate per Kilo : through transport cost quoted from port of origin to airport of

destination without hidden cost of handling at the gateway (trans-shipment hub) Carrier selection : ocean carrier selected based on their experience in handling the

sea-air shipment at the trans-shipment hub such as hot stowage, early delivery order, space commitment, direct sailing. Air carrier is carefully selected subject to the final destination

Some Sea-Air hubs: Asia/India via Dubai to Europe,Africa and USA/Canada North Asia (China) to Seoul to Europe and USA/Canada Asia/India to North America to Latin America

Cost comparision between Sea, Sea-Air, Air

SeaSea-AirAir

? Our staff are well-training for Garment On Hanger_GOH. We strictly follow

vendor/buyer instruction as well as proper shipping instruction for GOH. The below are brief SOP: 1-Received GOH booking order and GOH instruction from supplier/customer 2-Get booking GOH container/ULD and space from shipping line/Airline 3-Checking the GOH container/ULD to make sure it is in good condition for garment

stuffing 4-Perform GOH container/ULD installation in accordance with the customer’s requirement 5-Supervisation and quality control, photo taken and stick the PTI sheet into the GOH

container/ULD 6-GOH labeling outside the GOH container/ULD at the right door of the container as

“warning” for next step proper handling during loading, transportation… 7-Fastening the security seal once hanging installation is done and hand over to

respective terminal 8-Inform customer/supplier as GOH is ready for shipping for next step on related

documentation.

VNS GOH handling

?

VNS GOH handling…

?

VNS GOH handling…

VNS warehouse handling charge VNS export ocean & air freight VNS export local charge VNS export sea-freight flowchart VNS export air-freight flowchart

VNS Warehouse Handling Charges

VNS Export Local Charges