Intermodal Freight Transportation in China www.sf-express.com What - PowerPoint PPT Presentation

Intermodal Freight Transportation in China www.sf-express.com

What is Intermodal Freight Transportation? 2 Photo: Akira Kodaka

What is Intermodal Freight Transportation? Intermodal Freight Transportation – using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes. Kazakhstan Georgia China Azerbaijan Turkey Benefits: • Shorten freight transported time by reducing cargo handling • Enhance security by decreasing damage & loss • Save costs over road trucking for inter-continental use 3

Macroeconomic of China 4 Photo: Xinhua

After 10 Years of Surge, China International Trade is Keeping Steady China Trade in Goods with the World Since 1992 (Billion USD) 2500.00 Export, 1,827 2000.00 1500.00 Import, 1,605 1000.00 500.00 0.00 5 Data Source: China Customs Administration

China Logistics Cost Keeps Decreasing, but Still High Compared to Other Developed Countries China Social Cost and % of Total GDP 100 18.0% 12.1 17.4% 17.1% 80 17.0% 11.1 10.8 16.5% 10.6 10.2 60 16.0% 9.4 15.7% 14.9% 82.7 40 15.0% 74.4 68.9 14.6% 64.4 59.5 54.1 20 14.0% 0 13.0% 2012 2013 2014 2015 2016 2017 Social Logistics Cost GDP Logistics % 6 Data Source: National Bureau of Statistics

China Intermodal Transportation Infrastructure 7 Photo: Reuters

China Infrastructure Overview  Railway 121,000 km, High- speed Railway 23,600 km  Road 4,500,000 km, Expressway 131,000 km  Airports #: 76 international, 235 civil  Ports ： 7 of the world's top 10 ports by cargo volume Source: Ministry of Communications 8

Water-Rail Mode Growing Rapidly in 2018H1, Reaching 8.5m TEU by 2020 2017 China's Export/Import Heavy Containers Volume and Water-Rail Penetration of Major Ports • 2018 Jan-May, national ports have Heavy Container Volume (TEU) Water-Rail Intermodal % completed 1.75M TEUs of water-rail Yingkou Port: 6M 12% Tianjin Port: 15M 3% YOY 34.8% , transportation, with Dalian Port: 11M 4% logistics saving by 13B RMB. Qingdao Port: 18M 4% Yantai Port: 14M 1.7% • Optimistic forecast, in 2020 China‘s LianYunGang Port: 3M 5% Ningbo Port: 25M 2% container water-rail transport market Freight Volume (TEU) demand is ~8.5M TEUs Data Source: China Waterborne Transportation Institute 9

Although Road-Rail & Water-Rail are Mainstream, Penetration Rate is Low Compared to US & Europe China USA Europe Water-rail Transport % in <2% 40% 30-40% Marine Container Railway Intermodal 7 I-class railway ~3% Transport % in Germany 33% companies ： 40%-50% Railway Freight 77% 67% 70% Road Rail Freight Volume 19% 21% Structure Water 15% 10% 8% 9% 4% Road-rail transport Road-rail transport Intermodal NA accounts for 53% accounts for 56% Structure • China's long-distance road freight will be transferred to railways and waterways to achieve intermodal transport • Road-rail transport, water-rail transport will be the main intermodal transport 10 Source: Ministry of Transportation of China, Department of Transportation of USA

The Impact of e-Commerce 11 Photo: 视觉 中国

China Cross-Border e-Commerce Continues to Boom China Market Trend for Cross-border e-Commerce Cross-border eCommerce GMV（1000 Billion） Export & Import Trade（1000 Billion） 31.9 30.5 29.1 By 2020 Online Trade % 27.8 • 26.4 25.8 up to 37.6% 24.6 24.4 24.3 More consolidated • shipments and groupage consignments due to smaller volumes 12.0 10.5 9.2 8.1 6.7 4.8 4.2 3.2 2.1 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E Data source：Ali Research, Commerce Bureau 12

But Intermodal Transportation Will Still Remain As the Largest , Because… Supply Chain Agents would continue to be the Adaptor for Intermodal Transportation Industry to provide reliable transport services. Supply Chain Agents • Air freight • Road-water • LCL sea freight • Road-rail • Aggregate volume • LTL trucking • Road-air • Procure capacity • Distribution • Dispatch parcels centers • Manage inventory e-Commerce Small Intermodal Parcel Shipping Suppliers 13

The Trade War Effect 14 Photo: AP

How Great is the Impact to China? 73% of export, 82% of import of China are from Non-Americas areas Asia & Europe is dominating China international trade market 27% 19% 18% 48% 52% 19% 6% 11% Source: Ministry of Commerce 15

China – USA Trade War Hastens the Shift in Global Supply Chain Sourcing route would be more complicated as CN-EU-US, CN-SEA-US, etc 16

China’s One Belt One Road Initiative 17 Photo: Reuters

One Belt One Road is a Global Version of China Intermodal Network 1. 2. 3. 4. 5. 6. 7. 18 Data source：China Railway, Ministry of Commerce

One Belt One Road Instructure Progress Nearly 7,000 trains run in Central Europe, with 57 lines running, 35 domestic cities, and 34 cities in 12 countries in Europe. China's civil aviation and direct flights to 43 countries along the line, foreign airlines newly opened 18 national routes along the Belt and Road • China has signed bilateral maritime transport agreements (river transport agreements) with 36 countries along the route, the EU and ASEAN. • The national transportation logistics public information platform interconnect with 31 ports around the world. 19

By 2020, Market Scale for Intermodal Transportation to Reach 400B RMB (USD 58B) 3% of freight in China is by intermodal in 2016 6% of overall freight would be transported by intermodal by 2020, with CAGR 24% 2016 China’s Freight Market Size by Transportation Mode China's Intermodal Transportation Market Forecast Freight market size (Billion RMB) Intermodal transportation market size (billion Yuan) 5000 400 +24% 170 286.5 257.5 Railway Highway Waterway 2016 2020 Note: 1. Waterways include inland river transport and coastal transport. 2. US intermodal transportation ratio: 9% in 2013, 14% in 2040; China‘s intermodal transportation ratio: 3% in 2016, 6% in 2020. 20 Data Source: US Department of Transportation, China Development and Reform Commission, China Ministry of Transportation.

China Policies in Improving the Network Transportation 21 Photo: Visual China

China Government is Actively Supporting Intermodal Network Development •“Medium and long term planning for logistics industry” •“ Notice on initiating national intermodal transport pilot project” Improving •“Guidance on promoting healthy development of China Railway express” Policies and • Drafting "Measures on promoting intermodal transport development” Regulations • Drafting “Recommendation on promoting intermodal transport development” • Building techniques and standards system of intermodal • Integrated planning on CR express Promoting • Strengthen the collaboration among domestic government official Healthy • Improve the connection among countries along the routes Development • Improve facilitation of customs clearance for intermodal transport • Build international rules for intermodal transport 22

Developments Undertaken to Improve the Intermodal Network in China Large Logistics Channels and Nodes Schematic Diagram  By 2020, China will set up 11 Large Logistics Channels  Strategic Positioning of Large Logistics Channels: Intermodal transportation NorthEest Channel corridor for cross-region, long-distance, NorthEest Channel high-intensity cargos NorthWest Channel QingYin Channel  Channel Network include: 85 Logistic JieQiao Channel Yangzt Channel JingHu Channel Nodes ， 23 National Backbone Intermodal HuKun Channel BJ-HK-MC Channel SouthWest Channel Hubs (city) ， 51 Regional Key Intermodal NorthSouth Costal Channel Hubs (city) ， 11 Landside Border Ports Horizontal Chanel Vertical Chanel National Backbone Intermodal Hubs Regional Key Intermodal Hubs Landside Border Ports 23 Data source：Ministry of Communications

SF Express Supporting Intermodal Transportation 24 Photo: Air Cargo News

25 Years of Robust Growth Has distinguished foresight and early mover advantage Expansion into international Successful backdoor listing markets with the launch of and debuted on the A-share Singaporean business market on 24 Feb 2018 2013 Brought in strategic Established headquarter in Achieved revenue investors (CICC Capital, Became China’s Shenzhen, to adopt direct China Merchants Group, etc) of RMB 71.1Bn in Founded in Shunde, 2017 first express delivery management model to facilitate the FY2017 Guangdong by Wei WANG firm using air freight transformation to an integrated logistics service provider 2014 2013 2010 2009 2002 1993 3.1 SF Parcel Volume 2.6 2007-2017 CAGR (Bn) 34.3% 2.0 1.6 1.1 0.8 0.6 0.4 0.3 0.2 0.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source Company Filings, Company Information 25