Untitled - China Europe International Business School

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Organization of the logistic chain in the Chinese international trade Companies exporting to Europe put big emphasis in the importance of the transit times between the port in China and the port in Europe, and if the carrier has direct or non-direct call to the destination port. Shipping routes (schedules, ports of call and frequency) are established by shipping lines according to the flows of cargo. Several key elements determine the order to call ports: cargo volumes, feeder frequency and transshipment cost, berthing windows, cost of handling containers, logistics and transportation network of the port’s hinterland, terminal’s level of service among others. Logistics facilities Companies’ main requirement in China is a consolidation center. The consolidation centers are usually managed by International forwarders. The location and type of facility depends mainly on the price requirements and on the level of sophistication of the product and services required. Facilities in Logistic parks, trade zones and bonded areas are more expensive and sometimes still in an initial phase of operating so policies are not clear enough and operations can suffer from it. The distribution within Europe is usually decided and organized in Europe by the company or through a 3PL, with the support of distribution centers or through shipments of FCL directly to customers’ facilities. The Logistic department in China does not participate in the decision-making and has a superficial knowledge of the European part of the logistic chain. Companies usually make the difference on the kind of infrastructure they need depending on: � When the goods are in a transit country, companies require facilities in bonded areas. � When the goods need processing (assembly, packaging, etc) or for further distribution, companies require facilities in logistic parks with good land connections. On the other hand, when Chinese exporters are starting in a new market within Europe, before organizing their own distribution center, they demand warehousing space to freight forwarders to storage some goods to ensure a good service to new customers, reliability and to shorten delivery times, etc…Later, if the business is working, they will create their own distribution center. CEIBS Port of Barcelona Chair of Logistics 53
Organization of the logistic chain in the Chinese international trade Main difficulties for companies in the organization of the logistic chain Main difficulties along the logistic chain Actor Challenges and problems Shippers Consignees Shipping Lines � Companies in China have to deal with a large number, sometimes more than 100, different freight forwarders from European customers, making the day by day follow up and monitoring very complicated. � Booking space in vessels, especially in peak seasons and for hazardous cargo or with special requirements’ cargo. � High costs of the transportation between China and Europe. � Transit times between China and Europe are too long. � Difficulties in follow-up of shipments arrival to destination. � Slow response to incidents and mistakes during transportation. � To coordinate holidays periods for each country in Europe as well as holidays in China. � Frequent delays of the shipments. � Lack of information about the shipment (date of arrival, delays …). � Mistakes and omissions in documentation leading to trouble with European Customs. � Damage of goods because of too much manipulation. � Container demand variability � Congestion in European container Terminals and in hinterland networks � Short berth windows in European Ports � Pre-booking of space from shippers � No return -cargo from Europe to China CEIBS Port of Barcelona Chair of Logistics 54
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Untitled - China Europe International Business School

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