International Logistics Hubs

Connotation of Hubs

• Hubs are known at the country or provincial level
• Singapore/Hong Kong are global logistics hubs
• Malaysia functions as an ecommerce hub
• Chongqing acts as an intermodal hub
• International logistics flow involves hubs as part of the process
• Hubs are warehouses or facilities along the supply chain
• Hubs support various transportation methods
• The discussion focuses on international hubs versus domestic hubs

Location of International Hubs

• CFS Origin Hub are located near suppliers
• GDC, RDC, and MCC Hubs are intermediate points
• Decon Centers are used for deconsolidation
• Domestic Hubs/ Warehouses and consignees are at the destination points

Hubs and Transportation Methods

• Hubs support various transportation methods:
  • 1 to 1
  • 1 to many
  • Many to 1
  • Many to many

1 to 1 Transportation

• One supplier location ships to one consignee location
• Different modes of transport can be used
  • Ocean FCL
  • Airfreight
  • Rail FCL
  • Road X-border
  • Intermodal

1 to Many Transportation

• Destination deconsolidation center serves as an example
• One supplier loads a Full Container Load (FCL)
• Goods are shipped to a decon center for breakbulk
• Cargo is cross-docked into multiple box trucks for delivery to multiple destination warehouses

Multiple "1 to many" Flows

• Several "1 to many" flows converge at the decon center
• Convergence creates added efficiency in cross-docking activities

Many to 1 Transportation

• Origin consolidation hub serves as an example
• The concept is found in Buyer's consolidation discussions
• Many suppliers deliver cargo by truckloads to a consol center
• Cargo is planned and consolidated into an FCL which has the same final destination WH
• The FCL is shipped without opening the container until it arrives at final destination

Requirements for Many to 1

• End-to-end (E2E) planning is required
• Plan according to cargo ready dates (CRD), container loading, and in-DC dates
• Activities at origin hubs include cross-docking for short dwell times, and storage for long dwell times

3PLs and Buyer's Consolidation

• Large 3rd Party Logistics providers operate origin hubs across their network in the Buyer's consolidation space

BLP in China

• Bonded Logistics Parks (BLP) in China act as int'l hubs
• BLPs consolidate cargo China and overseas suppliers
• The cargo is stored and redistributed to overseas markets
• Cargo shipped into BLPs from either domestic or overseas suppliers get instant VAT refund or are bonded
• Due to it's large export volumes, the BLP model is different than the HK or Singapore models

Chinese Government and BLPs

• BLPs have two targets for the Chinese government:
  • To attract international goods movements, and build China’s own international ocean freight hubs
  • To improve logistics service for all enterprises in the regions

BLP Establishments

• BLPs are established in most coastal cities in China, including:
  • Dayaowan
  • Tianjin & Dongjian
  • Qianwan
  • Zhangjiagang
  • WGQ & Yangshan
  • Meishan
  • Fuzhou
  • Xiangyu & Haicang
  • Yantian & Qianhaiwan

Waigaoqiao BLP Space Allocation

• Shanghai’s Waigaoqiao BLP has 1.02 sq KM of allocated space
• Established in April 2004
• Total Park Size 1.02 sq km
• 278,300 Sqm available warehouse space

Multi-Country Consolidation

• Multi-country consolidation (MCC) is an international mixing hub
• Includes cross-dock and short dwell times
• Optimizes container utilization
• Diverts small cargo flow (LCL)

Regional Distribution Center

• Is another type of hub
• Stocks inventory
• Services provide added value
• Can provide longer dwell times
• Optimizes container utilization
• Diverts small cargo flow (LCL/Air/Road)

FTA impact on hubs

• FTA savings can impact choice of hub, which effects how cargo is transported
• The transport department needs work with the trade compliance department
• This is to gain a holistic view on logistics strategy

Shipper/consignee and incoterm

• The shipper/consignee may or many not be the party that gain from saved import duties
• This involves the seller or buyer which adds to the complexity to decision making