August 15, 2006

CSCMP China Event Summary

Moving Product in and out of China

The Council of Supply Chain Management Professionals held an education event in Shanghai on August 2nd and 3rd titled "The evolution of logistics and supply chain management in China"

One large MNC discussed their challenges with moving product in and out of China. This company is in the process of building a factory in Chengdu. They discussed their logistics challenges in transporting capital equipment.

Inbound Challenges

The various Customs offices in China do not communicate with each other, making importing to the ultimate destination of Chengdu very difficult.
There are no wide-bodied passenger flights flying into Chengdu.
There are only 15 "air-ride" trucks in China and it takes 2 weeks to do a round trip.
Ocean to air shipping is currently not feasible with China Customs.
Currently cannot move bonded products by air in China from one city to another (can only export).

Outbound Challenges (air out of Chengdu)

Not enough lift capacity for Chengdu-Hong Kong lane.
Lack of wide body space, thus cannot palletize.
No direct ship solution (ex., by using a Bonded Logistics Park)
No EDI Customs system - must do manual declarations.
Most people ship to Hong Kong and then import back to Mainland China to overcome these challenges.

Zone to Zone Issues

There are many zones in China, including the FTZ, EPZ, SEZ, BLP, etc.
Each zone is designed to be self sufficient.
The process to move form one zone to another is too complex.
Customs system has many limitations for bonded transfers between zones.
No air bond allowed.
Point-to-point Customs transfers has to be negotiated on a case by case basis and Customs would consider this an exeptional favor.
The Customs system limitations restrict on-bond transfers to less than 2 times.