Schneider National opens office, readies to offer trucking in China

Schneider National opens office, readies to offer trucking in China

   Schneider National has set up an office in Shanghai, China to provide logistics and transportation advice to international shippers as the largest U.S. truckload carrier eyes opportunities to provide road transport in a country with a highly fragmented trucking industry.

   Schneider received its consulting license from Chinese authorities within the past few weeks, and will offer advice to U.S. customers that source goods from there for export to the United States or that want to establish domestic retail and production facilities to serve the domestic Chinese market, top executives said in interviews during an invitation-only freight transportation conference hosted this week by the company and the Georgia Tech Institute of Logistics in Atlanta.

   Green Bay, Wis.-based Schneider, which also owns a large logistics subsidiary, is also preparing to submit an application for a road transport license that would give it the authority to haul goods within China, said Tom Escott, president of Schneider Logistics.

   Schneider officials made it clear that they are prepared to establish full-service trucking and distribution services in China to support customers who plan to serve a burgeoning consumer market that numbers in the hundreds of millions.

   “We think over time the more interesting opportunity will be the domestic market,” Escott said.

   China’s lack of an extensive road system makes logistics operations difficult, but the government has embarked on a massive highway construction program that will add 85,000 miles of road in the next 20 to 30 years, including plans to build seven expressways radiating from Beijing, as well as nine north-south highways and 18 east-west highways, according to Peter Keller, chief operating officer of NYK Line in North America.

   “China is building a highway network that will rival the U.S. network, but there is no company like Schneider there that’s capable of exploiting the infrastructure yet,” Escott said.

   Schneider officials said the company is studying several investment options, including acquisitions of Chinese motor carriers and joint venture partnerships with the goal of providing a spectrum of asset and non-asset based logistics services.

   In June, Yellow Roadway Corp. became the first heavyweight U.S. trucking company to establish a foothold in the Chinese market when it reached agreement to buy a 50 percent stake in a large, domestic freight forwarder. Yellow Roadway has also expressed an interest in building a trucking network in China.

   The moves by Schneider and Yellow Roadway highlight the desire of both companies to expand from purely domestic trucking organizations to providers of integrated international logistics services as global trade increases.

   Package delivery companies UPS and FedEx have operated in China for years under joint venture arrangements and are expanding their independent delivery networks as China loosens regulations on foreign ownership.

   Schneider hired a couple of people with extensive logistics experience in China, and has been researching the domestic trucking and logistics market for more than a year, Escott said. The office opened in May, but the company could not sign any consulting contracts until it received its consulting license.

   “We’re just kicking rocks, getting some local knowledge,” said Chris Lofgren, president of Schneider National, of the company’s efforts so far. “But over time we see it as an opportunity to grow with that economy.”

   Schneider has started to quietly inform its customer base about its new logistics capability ahead of a formal announcement and “it’s amazing how much interest” it has drawn, Lofgren said.

   Target, the second-largest U.S. retailer, is already studying how the inland transportation system works in China as it looks for ways to improve the quality of goods delivery from suppliers within the country, said John Bauer, Target’s manager for domestic transportation operations.

   Bauer said the big advantage in having a trusted motor carrier with an extensive network in China “is lowering of the customs duty by taking possession at the factory rather than at the consolidator.”