BLG Logistics has made a move to work directly within the Chinese market with the signing of a letter of understanding for a new joint venture with the Chinese supply chain provider Cinko SCM.
The scope of the agreement mainly covers imports and exports, rather than inland distribution, an area in which few global vehicle logistics providers have entered in China.
The companies will jointly operate a PDI centre at the port of Tianjin’s ro-ro terminal, called BLG Cinko Autotec, and will handle Chinese-built exports. Import vehicles for the Chinese market will also be processed. BLG Cinko Autotec plans to handle an annual volume of around 38,000 vehicles at the 55,000m2 facility. The company will primarily focus on storage, customs clearance, handling and a full range of technical services. While Cinko is active in vehicle forwarding, the joint venture will not become heavily involved with inland distribution.
“We will serve Chinese OEMs who are going to export cars and on the other side we will serve import organisations in China if they are going to get cars from Europe or America,” said a BLG spokesperson. “Our function is more related to import and export rather than domestic logistics.”
So far, the company said, it does not have any plans for establishing a transport fleet in China, reflecting the difficulty for foreign companies to run their own trucks in China. Most vehicle logistics providers from Europe and America have stayed away from investing in equipment in China, with low-cost domestic providers dominating the market.
“Cinko will handle the forwarding business by themselves and, if necessary, also the transport within China. If we have a clear demand from any customer for more transport capacities then we will evaluate if it makes sense to build up our own capacities,” said the BLG spokesperson.
Cinko was established in 1997 and initially focused on freight forwarding activities in connection with vehicle exports from China. In 2010 ocean forwarder Eukor acquired a 20% share of the company and today Cinko organises supply chains for Chinese automobile manufacturers.