Financial Performance - Consolidated revenue for the fiscal year ended December 31, 2023, was approximately $404.1 million, representing a 9.1% increase from $370.3 million in 2022[313] - Net profit for the fiscal year ended December 31, 2023, was approximately $10.3 million, compared to $7.8 million in 2022, reflecting a growth of approximately 31.7%[318] - Operating profit for the fiscal year ended December 31, 2023, was approximately $13.9 million, with an operating profit margin of approximately 3.4%[313] - Revenue from freight transportation services increased from approximately $346.0 million (93.4% of total revenue) for the fiscal year ended December 31, 2022, to approximately $383.2 million (94.8% of total revenue) for the fiscal year ended December 31, 2023[340] Transportation Volume and Logistics Network - Total transportation volume increased from approximately 7,800,000 tons in 2022 to approximately 10,170,000 tons in 2023, an increase of approximately 30.4%[313] - The company operates 35 regional sorting centers, 49 Cloud OFCs, and 33 service outlets, enhancing its logistics network[325] - The total transportation volume for the fiscal year ended December 31, 2023, was approximately 10,170,000 tons, with 1,341 employees as of the same date[328] - The company has established business relationships with over 60,000 transportation providers, supporting its extensive logistics ecosystem[326] Client Base and Service Offerings - The company serves over 4,000 manufacturers and trading companies across 341 cities in 31 provinces in China as of December 31, 2023[309] - The company provided freight transportation services for 2,160 clients in the fiscal year ended December 31, 2023, across various industries[343] - The company served 2,503 clients in fiscal year 2023, with no single client accounting for more than 6% of total revenue, demonstrating a diversified client base[378] - Fast-moving consumer goods, manufacturing, and new energy (vehicle) sectors accounted for 34.83% of the company's client industries as of December 31, 2023[379] Operational Efficiency and Technology - The company aims to improve service quality metrics, including late delivery rate and complaint rate, to enhance customer satisfaction[312] - The company intends to invest in technology and equipment to improve operational efficiency, including route planning optimization and sorting automation[334] - Shengfeng TMS, the main system for transportation services, allows real-time tracking of shipments and integrates with GPS and BeiDou Navigation Satellite System for enhanced client service[391] - The company has established comprehensive data privacy and safety procedures, employing encryption and regular system testing to protect confidential data[390] Environmental Initiatives - The company has disposed of more than 450 self-owned gasoline-powered trucks and purchased 16 electric heavy-duty trucks to promote green logistics[336] Strategic Plans and Growth - The company plans to enhance its nationwide transportation networks by establishing additional regional sorting centers and service outlets, particularly in key areas such as the greater Beijing area and Yangtze River Delta[333] - The company aims to broaden its service offerings by providing express delivery services and enhancing cloud storage services with supply chain management solutions[332] - The company plans to pursue strategic alliances and acquisition opportunities selectively to complement its business operations[337] Compliance and Regulatory Matters - The company is currently compliant with the Labor Contract Law, but has not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations[483] - The company is in compliance with laws and regulations related to social insurance and housing funds in material aspects[488] - The company has not faced any material disputes regarding third-party intellectual property rights as of the date of the annual report[403] - The company has adopted policies to protect client privacy and ensure compliance with PRC laws and regulations[470] Employee and Workforce Management - As of December 31, 2023, Shengfeng Logistics employed a total of 1,341 full-time employees, with 38.55% in operation support and 23.34% in management administration[410] - The workforce includes 988 contractors in addition to full-time employees, indicating a reliance on external labor for operational needs[410] Marketing and Brand Awareness - Shengfeng Logistics has launched various marketing initiatives, including utilizing social media platforms like WeChat to enhance brand awareness and client engagement[407]

Financial Position - As of June 30, 2023, the company reported approximately $29.1 million in cash and cash equivalents, an increase from $21.3 million as of December 31, 2022, representing a growth of 36.8%[49] - The allowance for doubtful accounts was approximately $2.8 million as of June 30, 2023, down from $3.1 million as of December 31, 2022, indicating a decrease of 9.7%[55] - As of June 30, 2023, approximately $31.7 million was deposited with financial institutions in the PRC, with $29.1 million not covered by deposit insurance[89] - As of June 30, 2023, accounts receivable net totaled $75,774, a decrease of 15.0% from $89,110 as of December 31, 2022[106] - The total tax payable as of June 30, 2023, was $3.20 million, an increase from $2.21 million as of December 31, 2022, reflecting a rise of approximately 45%[180] Revenue and Operations - For the six months ended June 30, 2023, total revenues increased to approximately $184.97 million, up 11.1% from $166.54 million in the same period of 2022[71] - Transportation services generated $173.99 million in revenue, representing a 12.5% increase from $154.61 million in the prior year[71] - The company's operations are primarily based in the PRC, with revenues from this region amounting to $115.25 million for the six months ended June 30, 2023, up from $95.17 million in 2022[73] - The company generates revenue from transportation services and warehouse storage management services, with revenue recognized upon delivery and on a straight-line basis, respectively[63][64] Assets and Liabilities - As of June 30, 2023, contract liabilities amounted to approximately $1.2 million, compared to $1.1 million as of December 31, 2022[70] - The company did not recognize any impairment loss on long-lived assets for the six months ended June 30, 2023, and 2022, suggesting stable asset performance[58] - Intangible assets, net increased to $12,237 as of June 30, 2023, from $6,711 as of December 31, 2022, primarily due to the acquisition of land use rights valued at approximately $5.9 million[109] - The total operating lease liabilities decreased from $27.14 million as of December 31, 2022, to $20.78 million as of June 30, 2023, reflecting a reduction of about 23%[163] Debt and Financing - The total short-term bank borrowings balance was approximately $34.9 million, down from $47.7 million as of December 31, 2022, representing a decrease of 26.5%[123] - The Company entered into a short-term loan facility agreement with Bank of China Fuzhou Jin'an Branch for a total facility of approximately $12.3 million at a fixed interest rate of 4.35% per annum[128] - The Company drew down approximately $11.1 million under a new short-term loan facility agreement with Bank of China Fuzhou Jin'an Branch at a fixed interest rate of 2.5% per annum[131] - The Company has financial covenants requiring a current ratio of no less than 0.85 and financing exposure balance not exceeding approximately $55.4 million[131] Taxation - The Company's effective income tax rate for the six months ended June 30, 2023, was 17.9%, compared to 13.1% for the same period in 2022[172] - The Company reported a total of $7.87 million in income before income taxes for the six months ended June 30, 2023, significantly up from $2.83 million in the same period of 2022[170] Legal and Compliance - Approximately $1.0 million (RMB 7.1 million) was frozen in bank due to pending lawsuits, included in restricted cash as of June 30, 2023[192] - The Company does not anticipate that the outcomes of legal proceedings will have a material adverse effect on its consolidated financial position or results of operations[192] Shareholder Information - The Company completed its IPO on April 4, 2023, raising gross proceeds of $9.6 million from the sale of 2.4 million Class A Ordinary Shares at $4.00 per share[183] - As of June 30, 2023, the Company had 40.52 million Class A Ordinary Shares and 41.88 million Class B Ordinary Shares issued and outstanding[184] Subsequent Events - No subsequent events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements as of the issuance date[193]

Corporate Structure and Ownership - As of December 31, 2022, the company had a total of 41,880,000 Class B Ordinary Shares held by Shengfeng International Limited, reflecting a significant ownership concentration[20] - The company undertook a reorganization in 2020, resulting in a share capital amendment from $50,000 divided into 50,000 ordinary shares to $50,000 divided into 400,000,000 Class A Ordinary Shares and 100,000,000 Class B Ordinary Shares[14] - The company’s share capital structure includes Class A Ordinary Shares with one vote per share and Class B Ordinary Shares with ten votes per share, indicating a dual-class voting structure[20] - The ownership structure of the VIE includes Fujian Yunlian Shengfeng Industry Co., Ltd. (54.58%) and Yongxu Liu (30.99%), with Mr. Liu indirectly owning 80.12% of Shengfeng Logistics[99] Initial Public Offering - The company completed its initial public offering (IPO) on April 4, 2023, raising approximately $8.5 million from the sale of 2,400,000 Class A Ordinary Shares at a public offering price of $4.00 per share[15] Subsidiaries and Operations - The company has established a total of 30 majority-owned or wholly-owned subsidiaries under PRC laws, enhancing its operational capacity[12] - The company has a significant presence in the logistics sector, with subsidiaries providing transportation and warehouse storage management services across various provinces in China[24] - The company’s principal activities are primarily focused on transportation and warehouse storage management services, which are critical for its operational strategy[24] Variable Interest Entity (VIE) Structure - The company’s corporate structure includes a variable interest entity (VIE) arrangement with Shengfeng Logistics, allowing it to consolidate financial results under U.S. GAAP[16] - The VIE Agreements allow Shengfeng Logistics to consolidate financial results under U.S. GAAP, despite not having direct ownership[31] - The VIE Agreements have not been tested in a court of law in China as of the date of this annual report, posing risks to operational control[49] - The VIE Agreements may not provide the same level of operational control as direct ownership, leading to potential conflicts of interest and operational risks[51] - The company relies on the performance of Shengfeng Logistics and its shareholders under the VIE Agreements to maintain control over its operations[99] - If the VIE Agreements are invalidated, the company's business operations in China could be materially and adversely affected[90] Financial Performance - The company generated total revenues of $370.325 million for the fiscal year ended December 31, 2022[73] - The cost of revenues was $328.793 million, resulting in a gross profit of $41.532 million[73] - Net income for the fiscal year was reported at $7.826 million[73] - Current assets amounted to $135.697 million as of December 31, 2022[72] - Total liabilities were $150.173 million as of December 31, 2022[72] Regulatory Environment and Compliance - The company is subject to risks associated with the PRC government's regulatory actions, which could materially affect operations and the value of Class A Ordinary Shares[52] - The Chinese government has strengthened anti-monopoly supervision since 2021, but as of the report date, these actions have not impacted the company's ability to conduct business[52] - The Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies came into effect on March 31, 2023, introducing new regulatory requirements[53] - The company may face significant risks if it fails to obtain necessary permissions from Chinese authorities for issuing securities to foreign investors[53] - The company is not currently required to obtain permission from PRC authorities to operate or issue Class A Ordinary Shares to foreign investors[56] - The company may face risks related to compliance with evolving PRC laws and regulations, which could adversely affect its operations and ability to offer securities[59] Labor and Employment - The company is currently not in full compliance with PRC labor-related laws, particularly regarding social insurance and housing fund contributions[155] - Labor costs in China have been increasing, which may adversely affect the company's profitability if these costs cannot be passed on to clients[153] - The number of dispatched workers has exceeded the 10% limitation required by PRC regulations, which may subject the company to penalties[160] Taxation and Financial Regulations - Under the PRC Enterprise Income Tax Law, the company may be classified as a PRC "resident enterprise," resulting in unfavorable tax consequences[177] - Dividends payable to non-PRC investors may be subject to a withholding tax of 10% for non-PRC enterprises or 20% for non-PRC individuals, potentially reducing investment returns[179] - The PRC tax authorities may adjust preferential tax treatment if they determine that a company benefits from reduced tax rates due to tax-driven structures[192] Future Outlook and Strategic Initiatives - The company plans to expand its market presence and invest in new technologies to enhance operational efficiency[76] - Future guidance indicates a focus on increasing revenues and improving profit margins through strategic initiatives and potential acquisitions[76]