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Intermodal Freight

Transportation in China

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What is Intermodal Freight Transportation?

Photo: Akira Kodaka

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Intermodal Freight Transportation – using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes.

Benefits:• Shorten freight transported time by reducing cargo handling• Enhance security by decreasing damage & loss • Save costs over road trucking for inter-continental use

Kazakhstan

China

Azerbaijan

Georgia

Turkey

What is Intermodal Freight Transportation?

4

Macroeconomic of China

Photo: Xinhua

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Import, 1,605

Export, 1,827

0.00

500.00

1000.00

1500.00

2000.00

2500.00

China Trade in Goods with the World Since 1992

(Billion USD)

Data Source: China Customs Administration

After 10 Years of Surge, China InternationalTrade is Keeping Steady

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54.1 59.5 64.4 68.9 74.482.7

9.410.2

10.610.8

11.1

12.117.4%17.1%

16.5%

15.7%

14.9%

14.6%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

0

20

40

60

80

100

2012 2013 2014 2015 2016 2017

China Social Cost and % of Total GDP

Social Logistics Cost GDP Logistics %

Data Source: National Bureau of Statistics

China Logistics Cost Keeps Decreasing, but Still High Compared to Other Developed Countries

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China Intermodal TransportationInfrastructure

Photo: Reuters

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Railway 121,000 km, High-

speed Railway 23,600 km

Road 4,500,000 km,

Expressway 131,000 km

Airports #: 76 international,

235 civil

Ports：7 of the world's top 10

ports by cargo volumeSource: Ministry of Communications

China Infrastructure Overview

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Freight Volume (TEU)

Heavy Container Volume (TEU)

Water-Rail Intermodal %

Ningbo Port: 25M 2%

Qingdao Port: 18M 4%

Tianjin Port: 15M 3%

Yantai Port: 14M 1.7%

Dalian Port: 11M 4%

LianYunGang Port: 3M 5%

Yingkou Port: 6M 12%

• 2018 Jan-May, national ports have

completed 1.75M TEUs of water-rail

transportation, YOY 34.8%, with

logistics saving by 13B RMB.

• Optimistic forecast, in 2020 China‘s

container water-rail transport market

demand is ~8.5M TEUs

2017 China's Export/Import Heavy Containers Volume and Water-Rail Penetration of Major Ports

Data Source: China Waterborne Transportation Institute

Water-Rail Mode Growing Rapidly in 2018H1,Reaching 8.5m TEU by 2020

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China

<2%

USA Europe

Railway Intermodal Transport % in Railway Freight

Water-rail Transport % in Marine Container

40% 30-40%

Germany 33%

• China's long-distance road freight will be transferred to railways and waterways to achieve intermodal transport

• Road-rail transport, water-rail transport will be the main intermodal transport

7 I-class railway

companies ：40%-50%~3%

Source: Ministry of Transportation of China, Department of Transportation of USA

Freight Volume Structure 15%8%

77%

4%10%

67%

19% 21%9%

70% Road

Rail

Water

Intermodal Structure

Road-rail transport accounts for 56%

Road-rail transport accounts for 53%NA

Although Road-Rail & Water-Rail are Mainstream,Penetration Rate is Low Compared to US & Europe

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The Impact of e-Commerce

Photo: 视觉中国

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China Market Trend for Cross-border e-Commerce

2.1 3.2 4.2 4.86.7

8.1 9.210.5

12.0

24.425.8 26.4

24.6 24.3

27.829.1

30.531.9

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Cross-border eCommerce GMV（1000 Billion） Export & Import Trade（1000 Billion）

• By 2020 Online Trade % up to 37.6%

• More consolidated shipments and groupage consignments due to smaller volumes

Data source：Ali Research, Commerce Bureau

China Cross-Border e-Commerce Continues to Boom

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• Air freight• LCL sea freight• LTL trucking• Distribution

centers

e-Commerce Small Parcel Shipping

• Aggregate volume• Procure capacity• Dispatch parcels• Manage inventory

Supply Chain Agents • Road-water

• Road-rail• Road-air

Intermodal Suppliers

Supply Chain Agents would continue to be

the Adaptor for Intermodal Transportation Industry to provide reliable transport services.

But Intermodal Transportation Will Still Remain As the Largest , Because…

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The Trade War Effect

Photo: AP

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52%48%19% 18%

11%

27%

19% 6%

Source: Ministry of Commerce

73% of export, 82% of import of China are from Non-Americas areas

Asia & Europe is dominating China international trade market

How Great is the Impact to China?

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Sourcing route would be more complicated as CN-EU-US, CN-SEA-US, etc

China – USA Trade War Hastens the Shiftin Global Supply Chain

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China’s One Belt One Road Initiative

Photo: Reuters

18Data source：China Railway, Ministry of Commerce

1.2.3.4.5.6.7.

One Belt One Road is a Global Version of China Intermodal Network

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Nearly 7,000 trains run in Central Europe, with 57 lines running,

35 domestic cities, and 34 cities in 12 countries in Europe.

China's civil aviation and direct flights to 43 countries

along the line, foreign airlines newly opened 18 national routes along the Belt and Road

• China has signed bilateral maritime transport agreements (river transport

agreements) with 36 countries along the route, the EU and ASEAN.• The national transportation logistics public information platform

interconnect with 31 ports around the world.

One Belt One Road Instructure Progress

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3% of freight in China is by intermodal in 2016

6% of overall freight would be transported by intermodal by 2020, with CAGR 24%

2016 China’s Freight Market Size by Transportation Mode

Note: 1. Waterways include inland river transport and coastal transport. 2. US intermodal transportation ratio: 9% in 2013, 14% in 2040; China‘s intermodal transportation ratio: 3% in 2016, 6% in 2020.

Data Source: US Department of Transportation, China Development and Reform Commission, China Ministry of Transportation.

China's Intermodal Transportation Market Forecast

257.5

5000

286.5

Railway Highway Waterway

Freight market size (Billion RMB)

170

400

2016 2020

Intermodal transportation market size (billion Yuan)

+24%

By 2020, Market Scale for IntermodalTransportation to Reach 400B RMB (USD 58B)

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China Policies in Improving the Network Transportation

Photo: Visual China

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•“Medium and long term planning for logistics industry” •“ Notice on initiating national intermodal transport pilot project” •“Guidance on promoting healthy development of China Railway express” • Drafting "Measures on promoting intermodal transport development” • Drafting “Recommendation on promoting intermodal transport development”

• Building techniques and standards system of intermodal

Improving Policies and Regulations

• Integrated planning on CR express• Strengthen the collaboration among domestic government official• Improve the connection among countries along the routes• Improve facilitation of customs clearance for intermodal transport• Build international rules for intermodal transport

Promoting Healthy

Development

China Government is Actively SupportingIntermodal Network Development

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Large Logistics Channels and Nodes Schematic Diagram

Data source：Ministry of Communications

Horizontal ChanelVertical ChanelNational Backbone Intermodal HubsRegional Key Intermodal HubsLandside Border Ports

NorthWest Channel

QingYin Channel

Yangzt Channel

HuKun Channel

JieQiao Channel

NorthEest Channel

NorthEest Channel

JingHu Channel

BJ-HK-MC Channel

SouthWest Channel

NorthSouth Costal Channel

By 2020, China will set up 11 Large

Logistics Channels

Strategic Positioning of Large Logistics

Channels: Intermodal transportation

corridor for cross-region, long-distance,

high-intensity cargos

Channel Network include: 85 Logistic

Nodes，23 National Backbone Intermodal

Hubs (city)，51 Regional Key Intermodal

Hubs (city)， 11 Landside Border Ports

Developments Undertaken to Improve the Intermodal Network in China

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SF Express Supporting IntermodalTransportation

Photo: Air Cargo News

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Has distinguished foresight and early mover advantage

1993

Established headquarter in Shenzhen, to adopt direct management model

Became China’s first express delivery firm using air freight

2013 Brought in strategic investors (CICC Capital, China Merchants Group, etc) to facilitate the transformation to an integrated logistics service provider

Expansion into international markets with the launch of Singaporean business

Successful backdoor listing and debuted on the A-share market on 24 Feb

2009 2010 2013

2014

2017Founded in Shunde, Guangdong by Wei WANG

2002

2018

Achieved revenue of RMB 71.1Bn in FY2017

Source Company Filings, Company Information

0.2 0.2 0.3 0.4 0.6 0.81.1

1.62.0

2.63.1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2007-2017 CAGR

34.3%SF Parcel Volume(Bn)

25 Years of Robust Growth

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SF Express Entered Top 100 Most Valuable Global Brands 2018

Other Achievements

1. Market Share By Revenue

2. Customer Satisfaction

3. Preferred Express Brand

4. Largest Air Cargo Fleet

5. Market Cap Among Listed Chinese

Peers

6. Only Logistics Company Among Top

10 Innovative Companies In China

7. First Company Awarded the

Operating License for Drones

8. First Company Approved To Establish

Civil Cargo Air Hub

No.1

Global express logistics integrated enterprise ranking of 2017

SF Express is the Leading Integrated LogisticsService Provider in China

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Notes:1. 15% owned by SF as of Dec. 31 20172. Insurance price service

Hive Box(1)

Insurance(2)

Industrial Park

Express & Delivery

Cold Chain

Heavy Load

Other Value-added

ServicesSelf-owned Warehouse

Client-owned Warehouse

Cold Chain

Full-Truck-Load

Less-Than-Truckload

Heavy Load FTL

Time-definite Express

International Express

Intra-city Delivery

Economy Products

To address market demand for diversified services, SF provides integrated logistics solutions for customers leveraging end-to-end service capabilities

SF Express Product Portfolio

www.sf-express.com

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