Kerry Logistics appointed Bank of America Merrill Lynch to provide a tailored USD cross-border sweeping and netting solution. The solution was implemented using Six Sigma methodology for the USD cross-border cash pool and incorporates a robust e-banking platform which provides visibility and control over the company’s subsidiaries around the world. It also includes scalable cash management solutions for the company’s operations in Asia, EMEA and Latin America.
Photo of Catherine Por, Kerry Logistics Network, Don Tay, Bank of America Merrill Lynch.
Headquartered and listed in Hong Kong, Kerry Logistics Network Limited is a leading international Asian corporation in the integrated logistics and international freight forwarding business. Kerry Logistics has an extensive distribution network and hub operations in Greater China, the ASEAN region, Europe and Latin America.
in partnership with
Six Sigma helps this company implement solution in China
With more than 1,500 bank accounts around the world and working with over 70 banks, Kerry Logistics faces a number of cash management challenges and the company wanted to improve global visibility and control over its cash. At the same time, utilising the funds effectively is a significant challenge – especially where foreign currency cash is concerned. Surplus cash can be trapped at the local banks and entity level in China for extended periods of time, despite cash shortages in other entities.
As Eddie Mak, Group Treasurer explains: “Other challenges include keeping track of regulatory changes in China and understanding how these changes could impact or be applied to the company’s cash management practices, as well as managing changes in the company’s local markets in order to mobilise both current and capital funds denominated in foreign currency.”
In order to address these challenges, Kerry Logistics was looking for a foreign currency liquidity management solution which would enable the company to concentrate foreign currency cash while benefiting from greater levels of automation. To achieve these goals, Kerry Logistics appointed Bank of America Merrill Lynch to provide a tailored USD cross-border sweeping and netting solution. The solution was implemented using Six Sigma methodology for the USD cross-border cash pool and incorporates a robust e-banking platform which provides visibility and control over the company’s subsidiaries around the world. It also includes scalable cash management solutions for the company’s operations in Asia, EMEA and Latin America.
Key milestones included:
Filing for approval with the State Administration of Foreign Exchange (SAFE), the local regulator.
Opening 59 accounts for 31 Kerry Logistics entities in China as well as one entity in Hong Kong.
Installing CashPro Online and an innovative cross-border paperless solution, and putting in place the USD cross-border cash pool. The first live transaction went through in early June 2015.
Best practice and innovation:
The project is particularly noteworthy because Kerry Logistics is the first company to obtain approval from SAFE to adopt the structure in Beijing to mobilise both current and capital items funds. The company is also the first to be granted special approval from SAFE for the end-to-end automation of trade and service cross-border transactions via a paperless solution.
Kerry Logistics demonstrates best practice by centralising the company’s foreign currency across China, while further mobilising cash at a global level using a USD cross-border cash pool. As a result, the company has optimised its FX and treasury costs while achieving better control over onshore and offshore foreign currency exposures.
By adopting this innovative solution and taking advantage of the latest opportunities in the market, Kerry Logistics has achieved significant improvements for its own cash management structure. Furthermore, by pioneering a new structure in China, the company is also paving the way for other companies to undertake foreign currency cross-border cash management on a level which has not previously been possible.
As Mak concludes: “This was a superb team effort and we are delighted to receive such recognition for this innovative solution we have established with our banking partner, Bank of America Merrill Lynch.”
Improved global visibility and greater control over company cash.
USD cross-border sweeping and netting enables funds to be utilised effectively.
A scalable cash management solution.
Greater levels of automation.