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Our logistic challenge

04-06-2021

China is by far the largest player in Asia when it comes to the production and distribution of consumer goods. These products are shipped by planes, ships and because of the reintroduction from the New Silk Road (a new railway over land which connects the continents Asia, Europe and Afrika), also by rail. 

A major player in the fashion industry challenged us: they moved production sites from China to other Asian countries, but didn't want to make concessions in terms of ecological footprint, transit times and costs. A challenge made for us.  

The fashion industry continues to grow. Instead of four seasons there are now 52 seasons in a year when it comes to new collections. Most fashion is produced in Asian countries. There is a good chance that your clothing has a label with the text 'made in China' or 'made in Taiwan'.

Made in... Vietnam?

As demand increases, the number of production sites is growing. Not only in China, but also in the rest of the continent. Many brands do not want to completely dependent on China when it comes to manufacturing and shipping these goods. One of the biggest reasons for moving production from China to other countries is the tariffs imposed on US or European imports from China.

Neighboring countries such as Vietnam and Thailand are the rising stars when it comes to fashion production sites.

The disadvantage of these countries is that shipping via land has quite a few snags logistically. There are no good road networks to and from Central Asia and transport times are enormous. Air freight, on the other hand, is a fast and safe option. But also the most polluting option. The customer who challenged us is aware of the enormous impact on the environment and takes responsibility for this. That's why air freight wasn't an option to them. 

More and more organizations are aware of their growing environmental footprint and are looking for ways to reduce their emissions. This starts with optimizing the distribution channels.

 A lower negative impact on the climate

In this specific case, intermodal transport was the solution for our customer. This is a combination of different means of transport, including rail. From the various locations in North and South Vietnam and Thailand, ships sail to the port in Qinzhou, China, where the containers are transferred from seagoing vessels to the rail platforms. This is done specifically for FCL and LCL solutions from the ports of Haiphong and Ho Chi Minh.

By rail, these shipments go via rail directly to the European terminals: Duisburg (DE) and Tilburg (NL). This provides the following benefits for our customer:

  • From the production locations in Vietnam/Thailand to Duisburg (Germany) it only takes 23 days with this sea-rail combination;
  • the entire journey by sea would take ten days longer;
  • these shipments have 4-5 sailings per week in Asia;
  • usually this route is only traveled by plane; with the combination of sea freight/rail freight, the CO2 emissions are 60-75% lower.

By using intermodal transport, we offer a great alternative for this specific customer. Did you know that we can calculate the emissions per mode of transport for your organization? You can request a full report and receive it for free.

Request a free CO2 advisory report 

Fewer hidden costs and a better sales cycle

But there's more on the bright side. Because in addition to the lower impact on the environment compared to air freight and the faster delivery times compared to sea freight, it also has a positive effect on all the costs in your supply chain. If you look specifically at the transport costs, you will probably opt for transport by sea freight. But if you dig deeper into costs, you'll find that while rail freight is more expensive in the beginning, it's more beneficial in the long run.

The shorter transport times shorten the sales cycle and your end customer will receive the goods faster. The impact, especially in the fashion industry, is increased cash flow and a flexible sales cycle. More importantly, the cost of ownership (cost of capital/cost of inventory during transportation) is also greatly reduced due to the high commercial value of these goods.

Have you ever calculated how much you spend per day on transport insurance, risk costs, taxes, storage, etc.? Saving an average of ten days in costs per shipment across the entire supply chain can make a big difference in the long run.

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