NSEC Symposium (Presentation IV-06-LogisticsDevelopmentGMS)

8/6/2019 NSEC Symposium (Presentation IV-06-LogisticsDevelopmentGMS)

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Hercules Logistics and Forwarding Ltd.

Seizing the Opportunities and Promoting theDevelopment of Logistics in Greater Mekong Subregion

Guangxi Hercules Global Logistics Co., Ltd.

OutlineOutline

. The overview of Guangxi Hercules Logistics

. Introduction to business of Hercules Logistics inthe sub-region

. The development opportunities, difficulties andmain existing problems for the logistics in GMS

. Suggestions for the logistics development inGMS

. Hercules Logistics investment plan for logisticsbusiness in GMS






The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views orpolicies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does

not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of theiruse. Terminology used may not necessarily be consistent with ADB official terms.


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Guangxi Hercules Global Logistics Co., Ltd. is the wholly-owned subsidiary of

Shenzhen Hercules Limited Liability Company, which is among the top hundred

enterprises in Chinese logistics, with its headquarters in Nanning and branches in the

cities of Fangcheng, Beihai, Qinzhou, Kunming, Guiyang, Guigang and so on.

As a corporation focusing on the international freight forwarding business, Hercules

Logistics offers the services covering international ocean shipping, air transportation,

trailer , storage, multimodal transport, customs clearance, shipping agent etc. The

corporation has made the Beibu Gulf Port as its main access to the sea, which

provides many convenient transportation means for the enterprises in the southwest

region.

The corporation is the largest carrier of import and export at the ports, for example, Beibu

Gulf Port and Xi River area, and has rich experience in international dangerous cargo

transportation (fireworks and crackers, yellow phosphorus, phosphoric acid etc.) andthe operation of cabinet freezer. The corporation is also the only enterprise that wins

the bidding to provide services for sub-branch line of foreign trade (south China common

feeder ) from the Beibu Gulf Port, Guangxi to the western port of Shenzhen .

The overview of Guangxi Hercules Logistics

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The type and quantity of goods that were respectively

exported to Vietnam, Thailand , Myanmar and Cambodia in

the past two years:

2,000 unit boxes were exported to Vietnam, 2,300 unit boxes to Thailand, 100 unit boxes to

Myanmar and 30 unit boxes to Cambodia. The goods mainly covered sulphate, mechanical

equipment, metallic oxide, chemical fertilizer, phosphate, food and so on;

The main original places:

Among the goods above, Guangxi local goods were more than a half of the total goods and

the rest goods were from Yunan and Guizhou region. However, a half of manufacturers that

produce local goods, for example, phosphoric acid, in Guangxi are set up by the people

from Yunan and Guizhou region. Those manufacturers are built at the ports, which can

greatly reduce the transportation cost for domestic logistics( refers to the land t ransportation

from Yunan and Guizhou to Guangxi ports).

Introduction to the Business

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The bonded logistics system of Guangxi Beibu Gulf Economic Zonehas the superiority than others, for Guangxi is the only coastal

province in the west region of China, which can give play to thecomprehensive strengths for connecting ASEAN by the ocean and

land transportation. The economic zone at Xi River will help todevelop the location advantages of Guangxi, which is the connection

part of pan-Pearl River and ASEAN. The west region of Guangxiwith rich resources is not only the logistics thoroughfare connecting

Yunan and Guizhou but also the passage for Guangxi and Yunan to

connect with ASEAN.

Development Opportunities, Difficulties and Existing

Problems

() The existing difficulties and problemsIn recent years, thanks to the effort of sub-regional countriesand relevant organizations, for example, the Asian Development

Bank, sub-regional countries have made great progress in theefficiency and convenience of trans-border transportation andlogistics, which further promotes the economic cooperation in

Greater Mekong Sub-region. However, there are some problemsin the logistics circle of the sub-region. The problems, such as

insufficient infrastructure, the lack of unified logistics standard,shortage of talents, undeveloped means of logistics information

and low efficacy of customs clearance, have limited thedevelopment of the integration and competitiveness of sub-region economies. The prominent problems found in the

concrete process of logistics business are:


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1. Freight cars are changed at the place of Kilometer Zero, for there is nodirect land road to Vietnam, which has reduced the logistics efficiency andincreased the cost;

2. The export goods in Yunan and Guizhou cannot be transported to thecountries and regions in GMSby land. Instead, the goods are carried to thecoastal ports by railway or highway and then to the destination ports throughocean shipping;

3. There are many differences in customs clearance and relevant policies ofall countries;

4. In the aspect of settlement, there lacks the new system for convenient andmutual-benefit capital flow and banking settlement for China and ASEAN;

5. There lacks the practical logistics coordination mechanism and regionallogistics association among the countries. The cooperation of logisticsenterprises in all countries is insufficient and low-level.

OutlineOutline

. The overview of Guangxi Hercules Logistics. Introduction to business of Hercules Logistics in the

sub-region

. The development opportunities, difficulties and mainexisting problems for the logistics in GMS

. Suggestions for the logistics development in GMS. Hercules Logistics investment plan for logistics

business in GMS


sub-region



business in GMS


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1. Accelerate the infrastructural developmentin Mekong River Basin, enhance the logisticsefficiency and reduce logistics cost;

The development of any economy needs to fullyexchange resources with the broader areas beyond theeconomy itself and even the whole world. The logisticchannel via sea route of Greater Mekong Sub-region(GMS) serves as a major channel for developing globalmarkets and resources. Optimizing the deployment oflogistics channel via sea route from a global perspective isintegral to the GMS development. As a result, establishinga sea-route linkage system between Guangxi, the onlycoastal province within GMS in China, and other countriesin Indo-China Peninsula, is of great significance toconsolidating the industries in coastal areas of GMS, andexpanding to the industries in inland areas of GMS throughinland rivers ,roads, and railways.

Recommendations

In particular, inland river transport is a major means fortransporting the goods with waterway in GMS. However,the inland river transport in GMS has been largelyconstrained due to such negative factors as backwardseaport and watercourse facilities. This has adverselyaffected the countries along Mekong River, particularly theirinland areas, in fully leveraging the advantages of Mekongwaterway in terms of low cost and heavy transport volume.Under such context, the countries of GMS are required tospeed up the river transport logistics development drive theeconomic development in the areas along the river,

promote the linkage between river and sea route, andintegrate the inland and coastal economies of GMS into thebroader market-based economies.

Recommendations


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2. Implement relevant policies to enable the seamlessaccess of overland transport in GMS

Compared with waterway transport, overland transport is a fasterand more convenient logistics approach. However, the overlandtransport is often subject to the control of different countries incustoms clearance and safety. Therefore, it is necessary for thecountries to enhance coordination in an appropriate manner andpromote the development of an overland economic corridor onthis basis. This meeting will focus on the development ofoverland economic corridor in the region, in particular theeastern, central and western corridors. The overland economiccorridor can help fully leverage the long coastal lines of Indo-China Peninsula, exchange the coastal resources and expand tothe inland areas, break the limits of inland boundaries of differentcountries, and promote the integration of resources within theregion that were formerly constrained by inland boundaries. In

order to facilitate the seamless access of overland transport ofGMS, and reduce the multiple constraints of overland boundarieson logistics, the countries of GMS need to take concrete actionsto implement the formerly agreed policies.

Recommendations

3. Expedite the training and introduction of modernlogistics talents and promote the development oflogistics information network;To drive the growth of logistics of different countries in GMS, it is ofgreat importance to promote the training of global logistics talents.These talents have to not only master Chinese, English or other locallanguages, but understand the interactions between industries andlogistics, and be able to address the cross-border political and culturalissues.

At present, integration of GMS is affected by the unsmooth customsclearance between/among the boundaries of different countries, and bythe unsound information sources and connectivity system within theregion. In modern society, logistics and information exchange networkserve as fundamental links within and outside the economies, and have

even become the key linkages with supply chain management. Combining physical industries, logistics networks and financial and

logistics information exchange networks will significantly transform thephysical economic model and promote the development of physicaleconomic industries in GMS. Lack of a regional financial media and thepoor impact of regional business attraction cultural exchange platformpose a major challenge to the regional integration of GMS.

Recommendations


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4. Establish a logistics cooperation and coordinationmechanism led by governments of GMS, remove theadministrative and regional barriers affecting thelogistics development and create a modern macroenvironment for logistics development;As various authorities are involved in logistics management,different countries are recommended to establish a cross-sectoral and operational mechanism similar to the joint meetingsystem of modern logistics in China, develop a coordinationsystem among different countries and define the leadingagencies of coordinating the regional cooperation at differentstages to promote the regional coordination. Take China forexample, the transport sector will take the lead at the stage ofdeveloping transportation corridors, while the commerce sectorand NDRC for developing logistics corridors, and NDRC andMIIT for developing economic corridors. At whatever stages,due to the special characteristics of international logistics, the

central governments of different countries within the region arerequired to be fully involved in it. The joint meeting systems atcentral level in each country should work closely with those atlocal level so as to break the administrative and regionalbarriers that affect the cross-border logistics developmentwithin GMS.

Recommendations

5. Establish a regional logistics association orchamber of commerce for GMS;

It is crucial to fully leverage the role of international logisticsorganization in managing and coordinating the development oflogistics industry under the framework of GMS cooperation and theregional logistics coordinative and cooperative mechanism led by thegovernments within GMS. An international logistics organization willhelp the logistics businesses of each country within GMS be moreeasily, directly and extensively engaged in forming the internationallogistics organization. So far, the representatives from logistics sectorwithin GMS have gathered several times to discuss how to establishan international logistics organization. However, the establishment ofan international logistics association/chamber of commerce within

GMS just stays at the stage of calling or proposal. We encourage thegovernments to support the professional organizations related totransportation and logistics to be involved in international coordinationat various occasions. The stronger associations should play theirleading roles, and promote the in-depth communication among theassociations from different countries. Enterprises or professionals withstronger influence are also encouraged to lead this process.

Recommendations


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6. Accelerate the development of an industrysystem that is based on industry clusters, linkedwith transportation and logistics corridors andmodern supply chain management;

Governments of GMS countries should incubate variousindustry clusters including industrial, commercial andagricultural parks along the transportation and logisticscorridors to promote the joint development of industries andlogistics, and coordinated growth of logistics, capital,information and trade flows within industry systems, and helpestablish an industry linkage system that features modernsupply chain management.

As the industry systems of different countries within GMS are

similar, it is necessary to consolidate the resources to meet

their own needs within the region and serve the other regions.Specifically, a regional logistics center will be established on

the basis of the regional transportation hub to promote theeconomy of scale within GMS.

Recommendations

The current status is that such proposals as the

development strategy of One axis and two wings forChina-ASEAN proposed by Guangxi, Two corridors and

one circle proposed by Vietnam, and strategy proposedby Yunnan need to be put into practice, while the

overland corridors including Kunming-Bangkok Highwayand Guangxi-Singapore need to be further improved. Inaddition, the regional logistics corridors, logistics centers

and economic corridors are yet to be made available.

Hercules Logistics is willing to make its due contributionsto addressing these issues, and the governments

guidance and support is critical in this process.

Recommendations


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7. Fully leverage the role of industry and logisticsmedia, conferences and holidays in cultural exchangeand communication

Media, conferences and holidays belong to cultural concepts innature. As a Chinese saying goes, Cultural events set the stage,and trade activities play the star role, indicating the significanceof linking economy and culture. To date, some excellentinternational economic and trade cooperation platforms includingChina-ASEAN Expo have been established in GMS.Governments of the region have also created their ownplatforms of business attraction culture with their local culturalresources. However, an authoritative financial media that coversthe whole region is yet to be launched. Under the context ofdeveloping regional industries, harbors, transportation and

logistics system, a professional media dedicated to providingservices for the industries and logistics is urgently needed.Additionally, the poor information and ideas exchange andforeign publicity within the region cannot meet the needs of theregional development.

Recommendations

8. Speed up the development of logistics

technologies, and enhance the modern logisticsservice and management level;

It is recommended to strongly develop modern logistics

technologies that can help improve the connectivity of different

countries within GMS, in particular the Internet of things(focusing on modern logistics information technologies) , and

standardization technologies. It is also necessary to promotethe effective and efficient integration of logistics information

exchange and logistics business among different countries and

facilitate the leapfrog development of trade and commerciallogistics within GMS.

Recommendations


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9. Actively develop modern logistics service market,

strongly support the growth of third-party andfourth-party logistics enterprises, and promote thefast and healthy socio-economic development withinGMS

To strongly support the growth of the third-party and fourth-

party logistics enterprises that can adapt to the internationaleconomic development, the governments should work closely

with each other and with the industry associations to provide

support for these enterprises in terms of land, taxation ,policyand fund. Only in this way can they help such enterprises grow

and expand within the region, help improve the regional supply

chain management system, establish coastal industry systemsand overland corridor industry clusters, and ultimately promote

the fast and healthy socio-economic development of GMS.

Recommendations

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business in GMS


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business in GMS


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1. Plan to open trailer transportation line on land

between China and Vietnam and carry out a projectof storage with 80,000 square meters in Pingxiang;

2. Based on the existing branch line transportation ofthe corporation, we plan to invest two or three shipswith 1,000TEU and open the near-sea shipping linesconnecting Beibu Gulf, Hong Kong, Bangkok and HoChi Minh (or Haiphong).

Plan

3. Based on the economy in Beibu Gulf, we plan to

construct the information center network for China andASEAN trade and logistics. Beibu Gulf will be developed

into the only comprehensive transportation hub thatconnects China and countries in Greater Mekong Sub-

region, which will result in the agglomeration effect oftrade and logistics. Relying on the effect, we will developit into an information center of trade and logistics

connecting Chinese mainland and ASEAN and facing the

world.

Plan


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Thank you

Documents

NSEC Symposium (Presentation IV-06-LogisticsDevelopmentGMS)