Global Logistics: National Retail Systems, Sinotrans establish partnership to provide logistics services from China to U.S.

Jeff Berman, Senior Editor -- Logistics Management, 8/28/2007

SEACAUCUS, N.J.—National Retail Systems (NRS), an asset-based provider of logistics services for U.S. retailers, and Sinotrans, the largest logistics and transportation services provider in China, said this week they have formally partnered up to establish a joint venture, entitled SinoNRS, which will offer integrated factory-to-store logistics services from inland factory locations in China to U.S. retailers.

The companies said in a statement that this partnership will function as an exclusive partnership between Sinotrans and NRS for U.S. import logistics services, including transportation, warehousing, consolidation, distribution, trade facilitation, and value-added services like ticketing, labeling, and packaging.  

In an exclusive interview with Logistics Management, NRS Senior Vice President Larry Ravinett said the objective of this joint venture, which had been in the works for the last two years, is to duplicate the systems, technology and management of the services NRS provides for retailers in the U.S. by working closely with Sinotrans, which is the largest asset-based domestic transportation company in China. (Sinotrans has more than 1,600 distribution facilities in China with more than 60 million square feet of space and more than 18,500 employees).

“What we are doing is completely duplicating our systems so that we are able to produce the exact same type of  technology that our customer base is used to here will be the same in China,” said Ravinett. “Part of that is the technology that goes into operating the buildings in China where there will be some automation [processes].”

He added that the pairing of NRS and Sinotrans is a good fit, because they are both asset-based companies.

Because the United States and Europe are such important trading partners with China, Sinotrans felt it must seek business partners in these regions that fit its strategic choices for business development, said Zhang Jianwei, president of Sinotrans Ltd., in a statement. He added that Sinotrans carefully examined various options and chose NRS as its strategic partner because of their strong reputation for logistics excellence, technology and innovation in retail logistics. As an asset-based provider, he noted they complement Sinotrans' strength in China with equal service capabilities in the United States.

“Many of our competitors are in the brokerage business,” said Ravinett, “and have seasonal highs and lows, which can create issues. We have always provided a steady service year-round as does Sinotrans. And it is kind of unique because we have an exclusive long-term agreement with Sinotrans that has to do with any type of retail business.”

Types of products that fall under this agreement, said Ravinett, include items that go into a department store or specialty store or have to do with finished products.

And Sinotrans, noted Ravinett, is also opening up its customer base to companies in the U.S., and NRS will be doing the same for companies in China. He added that both companies’ services will be made available to majors retailers in both countries.

“We will be talking to major retailers about multiple services that we can perform for them, and the fact that Sinotrans was affiliated for most of its existence with Chinese customs gives it a distinct advantage because most of their facilities are also bonded [with Customs officers located inside their building],” said Ravinett.

Heading into this partnership, Ravinett said NRS did not look to expand in a particular province or region. Instead, he said it was more interested in having a national approach by signing an agreement with Beijing and multiple provinces, which will enable it to establish a nationwide network. This will be especially beneficial, he said, as many customers have factories in multiple provinces.

Shipper benefits:
Ravinett said that for retail shippers that use this service to export and import out of China and the U.S. will find various benefits to aid them. On a communications level, he said this will allow shippers to work in multiple provinces simultaneously, because everything offered in the U.S. will be duplicated in China. The organizational structure will also be improved, he said, because China is known for being socially conscious, where the U.S. companies tend to be more interested in margin. And this partnership will be a pure profit endeavor with both companies focused on margins.

Another benefit is the sophisticated forwarding tools used by Sinotrans, which are very electronically advanced, and make it easier for the companies to work together and improve importing and exporting operations for shippers, said Ravinett.