MTL_ V-Logic partnership

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					News P.4                                               NEWS SECTION                               Network HKSG 24 May, 2000
                                                        SHIPPING GAZETTE

                                     TRADE AND SHIPPING NEWS

               MTL, V-Logic partnership
TERMINAL operator Modern Ter-                                                             "Hong Kong offers state-of-the-art in-
minals Ltd (MTL) has become a key                                                         frastructure by land, by air and by sea.
shareholder in V-Logic Ltd, an Internet                                                   Hong Kong is the natural and perfect
logistics services provider.                                                              e-fulfilment hub for Asia. Half of the
     MTL will also become a strategic                                                     world’s population is accessible to Hong
partner, providing logistics infrastruc-                                                  Kong from within a four hour flight time
ture, warehousing and MIS support for                                                     radius. Hong Kong has often been called
V-Logic.                                                                                  the store front of China - we want to
     First round funding for the Hong                                                     make Hong Kong the Internet store front
Kong-based company has been com-                                                          of all Asia," Mr Levesque explained.
pleted with the signing of EM Warburg,                                                        Goldman Sachs has estimated that
Pincus as lead institutional investor, it                                                 e-commerce sales in Asia will soar from
was announced at a press briefing last                                                    US$3 billion in 2000 to $52 billion in
week.                                                                                     2003 and V-Logic has been created to
     The newly established company                                                        realise this potential. It believes that
provides global retailers with cost-effec-     V-Logic CEO Peter Levesque                 businesses must not only adopt the In-
tive Internet fulfilment, product returns,                                                ternet, but also re-invent the entire supp-
on-line inventory management, logistics           V-Logic is building an Internet         ly chain supporting the enterprise. In
planning and control, and warehousing        back-office logistics platform that will     addition, International Data Corporation
for the Asia Pacific region.                 interface with global retailers’ front-end   research indicates that total Internet
     V-Logic sees the Asia Pacific           systems to enable international Internet     users in the Asia-Pacific region will in-
market as being neglected in terms of        fulfilment in the Asia Pacific region.       crease from 38 million today to 374
Internet ordering. The most popular          V-Logic’s programme will strive to fill      million users by 2005. These figures
retail web sites are based outside the       international orders quickly and cost-ef-    reveal the growing power that e-com-
Asia Pacific region which makes              fectively.                                   merce holds over the future of global
delivery of purchased products to Asian           The outfit’s multi-purpose web site     business in Asia.
consumers expensive and time consum-         will provide retail customers with an            V-Logic also realises the high level
ing. Furthermore, many retail sites do       on-line inventory management tool,           of service demanded from this corner of
not even offer delivery to Asia.             giving them total visibility to their        the market. Mr Levesque noted: "Inter-
     Jose Cheng, director, EM Warburg,       product flows through V-Logic’s Hong         net customers are extremely demanding.
Pincus, said of the decision to work with    Kong facility. Retailers will be able to     In fact they are redefining the standard
V-Logic: "We believe that the Internet       manage their Asia fulfilment in real time    of customer satisfaction. V-Logic will
direct retail link will continue to grow     from anywhere in the world. V-Logic’s        provide retailers with fulfilment solu-
rapidly on the back of global com-           web site will also provide retailers with    tions to satisfy their most demanding
munication structure improvement - as        industry updates and marketing support       customers - the Internet customers in
well as economic development in Asia."       for their sales initiatives in Asia.         Asia."
Sean Kelly, deputy managing director of           Asia Pacific represents a virtually         Currently, logistics services to Asia
Modern Terminals Limited was also en-        untapped e-commerce opportunity for          are relatively expensive and inefficient,
thusiastic about the strategic partner-      many traditional brand retailers, due to     particularly for small- to medium-sized
ship, saying: "The V-Logic business          the previously high cost and slow speed      businesses that want to sell their
model is a perfect fit for Modern            of cross border logistics and delivery.      products on-line. V-Logic believes it is
Terminals’ facilities and growth                  "V-Logic will be the back-office        cost and time prohibitive for retailers to
strategy. V-Logic will provide a seam-       enabler for retailers who want to reach      ship products from distribution centres
less connection between our powerful         the Asia market but who do not want to       that are located thousands of miles away
regional logistics resources and the         open expensive brick and mortar stores,"
global reach of the Internet."               said Peter Levesque, CEO, V-Logic.           continued on page 5
News P.5                                                 NEWS SECTION                               Network HKSG 24 May, 2000
                                                          SHIPPING GAZETTE

                                       TRADE AND SHIPPING NEWS
                                                                                            continued from page 4
         Exel launches Chinese                                                              from their customers, which is what is
                                                                                            occurring today. V-Logic sees it as bet-

             joint venture                                                                  ter to fill Asia’s Internet orders from a
                                                                                            point in Asia, thereby reducing the num-
 EXEL Logistics has gone into partnership with Chinese holding company,                     ber of hand offs in the supply chain and
 Chengtong, to form China’s largest supply chain solutions network.                         reducing high shipping costs associated
    Following 12 months of discussions between the two companies and the                    with filling orders in Asia. Furthermore,
 Chinese government, the new joint venture company, Exel Chengtong                          V-Logic wants to move away from the
 Logistics (ECL) expects to open an office in Shanghai in the next few weeks.               more traditional style of shipping which
 Exel will take a 64 per cent controlling stake.                                            focusses on bulk shipping. Mr Levesque
    With 60 subsidiaries around China, Chengtong effectively provides Exel                  explained: "When you talk about ocean
 with a platform for national distribution.                                                 lines, you’re talking about moving huge
    ECL is to focus on the automotive and consumer markets this year and                    volumes. Ocean lines carry significant
 expects turnover to be between US$1-2 million.                                             debt with the vessels they use. You can’t
    Exel has been offering supply chain consultancy services from its Hong                  go in units of one and be successful if
 Kong office since early 1999.                                                              you are a major shipping line. What
                                                                                            differentiates us is that we are finely
                                                                                            tuned to the unit of one.
  Moftec warns of over-confidence                                                                "We have a process in place that will
                                                                                            allow the culmination of having cargo
CHINA has seen foreign trade                   gy projects. Premier Zhu Rongji inked        come in from China or from wherever it
volumes rocket to US$137.1 billion             11 agreements on economic co-opera-          is manufactured in Asia and be able to
during the first four months of the            tion with Russia last year.                  get it to individual consumers, as op-
year, a 38.8 per cent increase on the               Raw materials, such as crude oil        posed to getting large amounts of
depressed levels witnessed during the          and minerals, accounted for 21.1 per         volume to major DCs in the US or
same period last year when a strong            cent of imports in the first third of the    Europe."
yuan put a squeeze on exports.                 year with a combined value of $13.7               V-Logic plans to concentrate on a
     A more prosperous Asia and a healthier    billion.                                     variety of customers, but the focus will
world economy pushed April’s import                 Crude oil imports alone were up         remain in the Asia Pacific market. North
figures up 33 per cent to $18.4 billion with   an immense 120 per cent, further             American, European and Asian brand
exports rising an equally impressive 38.7      evidence that China’s own oil reser-         retailers who wish to expand their
per cent to $20.5 billion. This puts the       ves are thinning.                            market by accessing a new customer
year-to-date totals for imports and exports         A s u s u a l , m a c h in e ry a n d   base in Asia will be targeted, as will
at $64.9 billion and $72.2 billion respec-     electronics made up more than 40 per         brand name designers and manufac-
tively.                                        cent of all exports. The domestic ap-        turers whose strategy includes a direct
     Despite the healthy gains, offi-          parel industries rebounded from last         Internet marketing model to offer their
cials at China’s Ministry of Foreign           year’s losses.                               products to the Asian market. Asia-
Trade and Economic Co-operation                     The garment sector exported             based traditional retailers who want to
(Moftec) have warned against over-             goods with a value of more than $10          expand the depth of their brand reach
confidence since the growth statistics         billion in the first four months of the      through e-commerce and newly estab-
only compare favourably because                year, a 47.8 per cent increase on the        lished virtual retailers whose expertise is
1999 was a poor year.                          same period in 1999. Textile exports         reaching the Asian consumer, but need
     Nevertheless, exports to Hong             were up 32.3 per cent to more than $5        to outsource their final delivery solution,
Kong and South Korea were dramati-             billion.                                     will also be focussed on.
cally higher, rising 45.3 per cent and              Customs and Excise has reported              Mr Levesque concluded: "Asia is
60.3 per cent respectively. Exports to         a 28 per cent revenue increase for the       big, and it’s going to get a lot bigger.
Russia have risen over 70 per cent on          month of April, compared with the            V-Logic welcomes Hong Kong to the "I
the back of large jointly funded ener-         year-earlier period.                         want it now" economy."

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