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SHOES ON THE MOVE
two factories in Portugal, where grants
from the European Commission
following that country’s entry to the
European Union in 1986, made new
industrial projects affordable and
attractive. The logistics company
brought shoe uppers back to England
from the new factories on the continent
for finishing. This model stayed in place
until the early years of this century, by
which time, in spite of transportation
costs and increases in lead times, the
savings on production costs made
manufacturing in Asia more appealing.
“I left that job in 2001,” Nick Lowe
says, “and the set-up that began in the
late 1980s was still in place. But within
a few years, Clarks decided it was no
longer viable. That was my first
experience of this. It makes sense
because this is about transporting
cubic-metres of goods and we in the
logistics industry have made our
trailers bigger and we have, therefore,
brought transportation costs down.”
Nevertheless, he accepts that moving
most production to the Far East has left
most of the footwear industry of today
facing the “unpredictability of
transportation costs”. Shoes are a
relatively high-value product, he says,
so small increases in transportation
costs can be absorbed by brands or
retailers without necessarily affecting
the price per pair. But these are out-of-
the-ordinary times and while the cost of
shipping a 40-foot container from
Ningbo in eastern China to
Southampton in southern England was
$1,300 at the end of 2011, the cost had
gone up to almost $4,000 by the time
of our conversation in May 2012. This
fluctuation in price is par for the course
in container shipping, as we shall see,
making a much more familiar debate
about the fluctuating price of raw hides
and leather seem simple by
comparison. “Timings are becoming
unpredictable, too,” he explains. “To
reduce costs, shipping lines have
extended their journey times by seven
days. At certain stages of the journey
they use slow-steaming, travelling more
slowly to save money on energy costs.”
This has frequently given a total journey
time of 40 days. This, plus an increase in
production costs in China and other
parts of Asia, has encouraged some
manufacturers to look at new locations,
including North Africa, Mr Lowe says.
It’s a part of the world that David
Maersk Line has launched a new idea that offers a fixed-time daily service
for shipments from Asia to northern Europe.
CREDIT: MAERSK