Untitled - China Europe International Business School

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Organization of the logistic chain in the Chinese international trade VI. Conclusions Players participating in the China-Europe logistic chain are mainly international companies. Chinese domestic companies will progressively gain more prominence. Main shippers and logistic and transport operators involved in the logistic chain in the trade between Europe and China are foreign international companies. As Chinese companies become international they will take a more decisive role in the logistic chain. Decision-making in the logistic chain is definitely located in Europe (or overseas). Cargo owners’ Global headquarter in Europe (or overseas) as well as Forwarder’s headquarters in Europe are currently taking care of the strategic design of the logistic chains of exports to Europe. Headquarters in China assume the role of monitoring the operations between China and Europe. However, guanxi which is deeply present in the way of doing business in China has to be taken into consideration, as it seems to have a concealed influence in the decision-making. More demand for global logistics packages, less fragmented logistic chain. Shippers are manufacturing or sourcing in China and other cost-advantage areas in Asia and selling all around Europe, and even worldwide. They are demanding more global logistics packages to all transport and logistic operators in order to provide the services required at a global level. The global packages refer to a geographical scope, however they also point out to a more extended range of services which will help reducing the fragmentation of the logistic chains. More operations will be performed in China. In some industries, shippers and customers are increasing the operations performed in China and therefore streamlining the facilities and operations needed in Europe. International Forwarders and 3PL’s will need to increase their services in China for their European customers, developing more complex logistic facilities and operations as well as performing more value added services to the goods. This will also demand more integration with Chinese suppliers. The increasing practice to consolidate cargo in China and build direct to customer containers shipped directly to the customer facility in Europe will likely have an impact in the need of distribution centers in Europe and diversify the ports of destination. Fewer players in the logistic chain but more powerful ones. In order to take advantage of economies of scale and synergies and sometimes just to remain competitive, companies are growing through M&A or using strategic alliances. This progressive concentration in fewer actors is also impacting in the organization of logistic chains as companies are developing their activities using a network approach to embrace more geographical areas but also to establish connections between these areas that can improve the overall efficiency. Specialization in niche markets is the path for small and medium size transport operators in order to remain competitive. CEIBS Port of Barcelona Chair of Logistics 61
Organization of the logistic chain in the Chinese international trade More competition but also more collaboration among players of the logistic chain Together with competition, the inter-dependencies between players are increasing in order to satisfy shippers’ demand of a more cost-efficient, reliable and less-fragmented logistic chain. More collaboration is a common demand among actors to effectively coordinate the flow of goods, information and money, satisfy security requirements, enable cargo visibility, and increase speed to market. Ports in Europe Northern and Mediterranean ports are considered to embrace different markets although at present, Northern ports are also supplying southern markets as they better respond to shippers’ requirements. Proximity to the cargo destination is still the main criteria to select the European port of destination in order to minimize the cost of land transportation within Europe. However as reliability in the lead times become increasingly important for shippers, other criteria stand out. For some special cargo (e.g. hazardous cargo) or to avoid unexpected delays, speediness and flexibility in customs clearance can determine the selection of a port. Higher frequency of calls and shorter transit times are also key aspects in the selection of the port of destination to fulfill the shippers’ requirement of speed to market. To attract more cargo from the Far East, Mediterranean ports need to further develop a comprehensive offer of logistic services (distribution centers, inland network connections, etc...) that improve the flow of cargo from the port to the markets. Becoming a hub for distribution to East European countries or to North Africa as well as specializing in certain industries/markets are also some strategies suggested by interviewees to increase their share of the Far East trade. The Port of Barcelona, particularly, could take advantage of the opportunities originated by Spanish companies increasingly importing from the Far East and distributing within Spain and to other European markets, which are currently settled in inland areas of Spain. Competitive distribution centers in the influence area of the port of Barcelona would be ideally located to distribute the main markets in Spain (Barcelona and Madrid) and to organize further distribution to European markets. The Port Authority of Barcelona in collaboration with other logistic and transport operators could lead actions to bring this solution to the companies’ attention and promote pilot experiences among them. The Port of Barcelona, however, will need to deal with regional governments’ subsidies within Spain, aimed to retain companies’ facilities in their territory. CEIBS Port of Barcelona Chair of Logistics 62
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Untitled - China Europe International Business School

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