Untitled - China Europe International Business School

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Organization of the logistic chain in the Chinese international trade Decision-making criteria Specific decision-making criteria have been gathered from the interviews to shippers and transport operators. However, for the report, they have been grouped in more general key elements that can apply to different sectors. They are not written in order of importance as priorities are different in every industry but the most quoted ones are highlighted in bold. Key elements in the decision-making of the logistic chain Decisionmaker Shippers Shipping companies Provider Criteria Freight forwarders Shipping companies Port of shipment Port of destination Ports � Good and reliable service in Europe (emphasis on fast response to incidences). � Brand � Competitive price � Global network and presence in China � Experience and industry know-how (especially for hazardous cargo) � IT capabilities (cargo visibility) � Freight price � Service (Reliable in transit time and schedule fulfillment, flexible in pre-booking space, easy in documentation procedures) � Other services (Payment conditions, free storage time in European port of destination, etc...) � Proximity to factory or cargo location (minimize road transportation) � Shipping schedules � Speediness of customs clearance � Price and service (handling cargo) � Proximity to cargo destination (minimize road transportation) � Speediness of customs clearance. Flexibility around the regulations, (e.g. dangerous goods). � Inland transportation network � Frequency of calls � Transit times � Access to big volumes of cargo � Level of service of the terminals � Logistic and transport infrastructures linking port with its hinterland � Feeder frequency and transshipment cost � Cost of handling containers � Berthing windows � Terminal and network congestion CEIBS Port of Barcelona Chair of Logistics 57
Organization of the logistic chain in the Chinese international trade V.3. The main players in the logistic chain Shippers and consignees The trend in China towards more high-value manufacturing and the increasing competition to lower costs at a global scale will drive the logistic outsourcing requirements for the shippers in China and the customers in Europe. Speed to market, more sophisticated logistic services, a more reliable and flexible logistic chain and less fragmentation in the flow of information and money are some of the cargo owners increasing requirements. Speed to market Shippers producing in or sourcing from China agree about the fact that the time required for a product sourced or produced in China to reach the European market is currently too long and needs to be reduced. This requirement becomes especially critical in some sectors and lead to use air transportation. � For a European retailer sourcing in China, from placing an order to reach the store, a product needs more than 100 days. If the sourcing process of choosing a supplier, sending samples, quality control, etc. is taken into consideration, then the whole process can last for more that one year. � In the consumer electronics sector, products with a high volatility price, and fast obsolescence after being launched, are shipped to Europe by air to reach the speed required. Logistic chain’s integration More and more customers in Europe are demanding door-to-door services to the manufacturing companies in China. Therefore, companies in China have shift from dealing with several logistic providers, usually their customers’ freight forwarder, to look for a contract with one global and comprehensive logistic provider who can manage the whole logistic chain for their exports from China to Europe. This global operator can be an international forwarding company (Kuehne&Nagel, Panalpina, Exel, etc…) as well as global intermodal companies (Maersk, …). The main requirement is to take care of all the necessary range of services to handle the flow of exports between the manufacturing site in China and the customers in Europe. A comprehensive network within Europe is a must. However an important presence in China is also required to ensure a smooth communication and easy the shipments’ follow-up in the Chinese part of the logistic chain. A reputation of good service in Europe, financial advantages and Chinese market know-how are also quoted by the companies interviewed as important issues in the selection of this kind of Logistic provider. Building direct-to-shop delivery containers For certain industries like retail or garment, freight forwarders and 3PL’s are starting to build logistic platforms in China to consolidate cargo and build containers to delivery directly to stores. Consolidating and performing specialized value added services (labeling, CQ, ironing, etc...) in China eliminate deconsolidation at destination in Europe creating a cost advantage. CEIBS Port of Barcelona Chair of Logistics 58
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Untitled - China Europe International Business School

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