Happy Chinese New Year to all the Board members and fellow senior colleagues!
I am here today to represent the work report for all of you as the following:
At the end of 2016, we set a strategic goal of corporate restructure, which is to gradually realize generating the company’s primary revenue from the U.S. rather than from China. A concrete way to achieve this strategic transformation goal is to establish a profit-generating model for the demand of the U.S. market.
After conducting market research, we decided to establish a profit-generating model for the container trucking service, namely the container trucking intelligent network platform.
In 2017, we set out necessary conditions to meet for this goal and to confirm the effectiveness, real demand, and operability of this profit-generating model through actual practice.
In order to make the operation of the intelligent network platform successful, the following conditions need to be met:
- There enough demand for the trucking business.
- The platform has adequate and stable supply and demand participants who are the buyer, seller, and carrier.
In the year of 2017, our work will start from the perspective of satisfying the above conditions.
We first started with transportation and signed a strategic agreement with COSCO Beijing, COSCO Qingdao, and COSCO Ningbo. The purpose is to connect the door-to-door shipping lines between China and the United States, and we are responsible for ‘to the door’ trucking business in the United States. This will increase the demand for the container trucking intelligent platform in the U.S. in the future.
We also signed a strategic agreement with Sino-Trans Guangxi and signed a sales and strategic agreements with Sichuan Minmetals Import and Export Company. The purpose is for the United States to China’s trade and bulk cargo containerized transportation practices. The product involved is sulfur.
Therefore, we have completed the establishment of transportation channels to connect buyer, seller, and carrier in the year 2017. We have confirm and realized the market research, operability, and effectiveness of the US container trucking intelligent network platform during the year of 2017.
According to the agreement between the seller and the buyer in the year 2017, the details of the implementation and the data are as follows:
- From June 2017 to December 2017, we cooperated with COSCO Shipping Lines Beijing Co. Ltd to ship 157 containers in between the U.S. and China. These includes140 containers shipped in bulk cargo containerized model transport from the United States to China as a trial.
- COSCO Qingdao started its trial operation in September 2017 with over 150 containers being requested for the price and 9 containers being completed. Tocomplete the transactions for all request, container trucking intelligent network platform is the only solution.
- Sino-Trans Guangxi has completed a door-to-door in bulk cargo containerized model to transport around 400tons of sulfur (20 containers) as a trial run from the United States to Yuntianhua.
- We completed ship 120 containers in bulk cargo containerized model to satisfy demand from Sichuan Minmetals Import and Export Company about 2,400 tons of sulfur.
According to the above practice and operation, the conclusions obtained are as follows:
- The bulk cargo container demand from China to the United States and the container trucking demand from United States port to door are huge, but the price does not always match the two sides. Also, the price inquiry can be cumbersome with only a few successful transactions. On behalf of the trial operation unit, COSCO Qingdao have completed the transaction of 9 containers from September to December, which if labor conducts it, it will be a considerable cost.
- here is a massive demand for the trade from the United States and China. The mode of the bulk cargo container is in line with the overall strategic needs of COSCO’s headquarter. For now, we have reached a consensus with COSCO’s headquarter. COSCO will fully support us in their efforts to promote the bulk cargo container business to ship from the United States to China, such as support and jointly develop our business with the lowest shipping fee.
- Sichuan Minmetals Import and Export need sulfur, with an annual demand of 300,000 to 500,000 tons (17,000 to 28,000 containers), fodder, rapeseed meal, alfalfa, DDGS, pea, sorghum, cottonseed. Pinewood, which carpenters need 10-2000 million tons, can be purchased directly by us and take advantage of our low shipping charge negotiated with COSCO.
- We have operated 120 containers in November because of the container trucking problem. As the truck owners were scattered, we have shipped 120 containers in four ships, which has taken us one and a half month.This proves that because of the decentralization of container truck owners, the need for the United States container trucking intelligent network platform is necessary.
Given that we have completed the connecting of the underlying demand side for the container trucking platform profitability model in the U.S. in 2017, and we already have a certain amount of underlying demand, and our network software engineers are already in place. We recommend the Board of Directors to approve to upgrade and development on our current network platform in 2018 and start establishing the U.S. container trucking intelligent network platform which will get connect with COSCO’s container shipping network platform.
2018 expected work objectives:
We will begin to set up the US container trucking intelligent network platform software design, development, and upgrade.
We will continue to increase the US export business and expand product range for bulk cargo containerize mode. At the beginning of 2018, we signed the service contract for the bulk cargo container distribution of 100,000 tons of sulfur with the Sichuan Chengdu Dingxu International Trade Co., Ltd. In the future, while maintaining the existing needs of Chengdu Dingxu, we are going to develop more varieties of bulk cargo container products with COSCO’s container trucking headquarter and COSCO North America.