Blog – A greener fashion industry puts rail to the challenge
Intermodal transport on the New Silk Road was put to the test. A large fashion company challenged Rail Bridge Cargo with the following logistics inquiry: changing the production sites in Asia without compromising on carbon footprint, transit times and costs. It was a challenge the Dutch logistics firm happily accepted. Jody Op den Buijsch from Rail Bridge Cargo writes in this blog how it was done.
The fashion industry is becoming bigger and bigger. Demands are growing week after week and instead of four seasons, there are now 52 seasons in a year when it comes to the fashion industry. Every new week, a new collection. Most fashion is produced in Asian countries. Probably, the label in your sweater says ‘made in China’ or ‘made in Taiwan’.
Made in….. Vietnam?
Since demand is increasing, the number of production sites is growing. Not only in China, but also in the rest of the continent. A lot of brands don’t want to be fully dependent on China when it comes to the production and shipping of these goods. One of the biggest reasons to change production from China to other countries is the import tariffs laid upon US or European imports from China. Neighboring countries like Vietnam and Thailand are the rising stars when it comes to fashion production.
The disadvantage of these countries is that shipping by road isn’t very convenient in general. There are no good road networks into Central Asia and shipping by air has a big impact on the environment. More and more organisations are aware of their growing carbon footprint and they are looking for ways to reduce their emissions. Starting with optimising their distribution channels can support this goal a lot. One of these organisations is a big player in the fashion industry and they challenged Rail Bridge Cargo with this logistic inquiry: changing the production sites without compromising on carbon footprint, transit times and costs.
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Using intermodal transport to reduce the organisation’s carbon footprint
In this specific case, intermodal transport is the solution. This is a combination of different modes of transportation, which includes rail. From the various sites in North and South Vietnam ships head to the harbour in Qinzhou, China, where the containers are reloaded from sea vessels to the rail platforms. This is specifically done for FCL and LCL movements from the harbours Haiphong and Ho Chi Minh. By Rail these shipments are sent straight by block train to the European terminals: Duisburg (DE) and Tilburg (NL). By using intermodal transport, Rail Bridge Cargo provides a great alternative for this specific client.
Some telling figures in this case:
- from the production sites in Vietnam/Thailand to Duisburg (Germany) takes only 23 days with this sea-rail combination;
- the complete journey by sea would take 10 days longer;
- these shipments have 4-5 departures per week in Asia;
- usually this route is only done by air; the carbon emission is 60-75 per cent lower with the combination sea/rail freight.
Did you know Rail Bridge Cargo can calculate the emissions per means of transportation for your organisation? You can request a full report and receive this for free.
Less hidden costs and a better sales cycle
But there is more on the bright side. Because if you’d only look at the shipping cost specifically you’d probably choose for a sea freight solution. This seems to be the best deal at first glance. But when you dive deeper, you’ll find out that – even though rail freight is more expensive at first – rail will have more benefits in the long run.
The transportation of the goods is 10 days shorter with rail freight, compared to sea freight. This means the sales cycle is shortened and your end customer will get their goods faster. The impact certainly in the fashion industry is increased cash flow and a more flexible sales cycle. Even more important, the cost of ownership (cost of capital / inventory costs in transit) is also reduced tremendously 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, warehousing etc.? Paying 10 days less through the supply chain can make a big difference in the long run.
Author: Jody Op den Buijsch