Richard Loi
Senior Vice President
UPS China
September 9 2006
Richard Loi
Senior Vice President
UPS China
September 9 2006
Integrated Air Express Industry and the Development of Middle and Northeast China
Integrated Air Express Industry and the Development of Middle and Northeast China
Logistics Challenges in China
– In 2005, total logistics cost in China is 3.4 trillion RMB, up by 12.9%,
and accounts for18.6% of total GDP. Comparing with the figure of
less than 10% in US, Japan and EU, China still has a lot of room to
improve.
– According to statistics, 50% of the retail price of the general
products in China goes into logistics cost. Over 90% of the time in
auto parts production are in storage, loading and transportation.
– “Accelerate the development of service industry, particularly IT,
finance, insurance, logistics, tourism and community services and
continue to increase the ratio and quality of service industry “ –
Premier Wen Jiabao, Eleventh Five Year Plan, March 2006
Case Study on Global Supply ChainJesse & Frichtel
Global Supply Chain and Outsourcing - Jesse & Frichtel
–Jesse & frichtel is a high-quality, cost effective dental lab– It found a partner in Shenzhen for production– A real case: A Pittsburgh birde made a last-minute decision to
correct the gap between her two front teeth just one week before her wedding:
– Friday: impression made– Friday evening: impression shipped to UPS’s Worldport
Facility in Louisville, Kentucky– Saturday: UPS customs brokerage cleared the shipment
at Hong Kong, delivered to Shenzhen– Monday – Thursday: Production in Shenzhen– Friday: new set of teeth arrives at Pittsburg
Jesse & Frichtel
Global Trend of Air Express Industry
Globalization - “The World Is Flat
- Thomas Friedman, New York Times Breakthrough the time boundaries Synchronized World Commerce Real time information
• Case One: A new cell phone worth 400 USD will depreciate 50% in six months. Reduction of a week’s transit time could save 8 USD loss.
• Case Two: Customized Scaled Production – NikeID
NikeIDCustomized Service Based on Scaled Production
• Customized service
• More Value-added with Global Supply Chain
• Competitive Advantage with Differentiation
• 100% Customer Satisfaction
Air Express Industry Contributes to the Development of Middle and Northeast China
• According to a study by the US-China Business Council in 2003, an
unrestricted integrated air express industry can bring additional 3 billion
investment to the major export industry, additional 84 billion industrial output
and add 800,000 job opportunities in five years.
• The study also finds out that the air express industry could help China
balance the development gap between the coastal area and the inland areas.
• When a company in the inland areas has the same access as a company in
Beijing or Shanghai to the global express network, the advantages of
resources and cost in the west area will not be offset by the higher cost and
longer time of transportation.
• The development of air express industry will further optimize the investment
environment and promote industrial restructuring.
Public Policy Environment of the Air Express Industry in China
• Aviation – opening of air rights and operational coordination
• Postal – A rational postal monopoly and level playing field
• Customs – further facilitation in support of hubs
• Multimodal – infrastructure and policy support
About UPS
• Largest package delivery company and leading supply chain solutions provider
• 2% of world GDP (6% of US GDP) goes through UPS each year.
• Serves over 200 countries and territories, covering all North America and Europe.
• 2005 Revenue: 42.6 billion USD
• 2005volume: 3.75 billion pieces
• UPS Fleet: 268, 9th largest airline
• Chartered Fleet: 309
• Daily flights: US: 1,071 ; International: 767
• Employees: 407,200 (Overseas: 58800 ; US: 348400)
– Headquartered in Shanghai
– 11 customs clearance facilities
– 23 branches covering over 200
cities
– 21 branches of UPS Supply Chain
Solutions
– 40 facilities of UPS Supply Chain
Solutions in mainland and HK
– Over 4,000 employees
UPS in China
DalianBeijing
TianjinQingdao
Nanjing
Suzhou
WuxiShanghai
Kunshan
HangzhouNingbo
Fuzhou
Xiamen
Guangzhou
Shenyang
Hong Kong (SAR)Shenzhen
YantianUPS facilities
UPS Supply Chain Solutions branches
Xian
Chengdu
Wenzhou
Changzhou
Dongguan
Fuoshan
Zhongshan
Shijiazhuang
Chongqing
Mumbai
EuropeOsaka
747-100
UPS Connects China with Asia and the World
Incheon Tokyo
Taipei
HK
Beijing
Guangzhou
Shenzhen
Bangkok
Penang
Kuala Lumpur
Clark
Cebu
Singapore
Jakarta
Fiji
Sydney
Anchorage
RockfordNewark
LouisvilleOntario
Honolulu
– 84 flights connecting Asia and US per week
– Next day delivery in major Asian cities
Shanghai
Richard Loi
Senior Vice President
UPS China
September 9 2006
Richard Loi
Senior Vice President
UPS China
September 9 2006
Integrated Air Express Industry and the Development of Middle and Northeast China
Integrated Air Express Industry and the Development of Middle and Northeast China