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SHOES ON THE MOVE
JULY/AUGUST 2012 | www.footwearbiz.com
making losses at last year’s rates, so
they’ve adjusted again. They say their
vessels are 85% or 90% full and that
they cannot sustain loss-making rate
levels. Whether you believe that or not
is up to you. There is a school of
thought that even if the actual bookings
are real, the bookings are not being
realised at the moment, and if you don’t
fulfil your booking you don’t pay.”
Footwear companies, like any other
consumer products operation importing
much of their product from the Far East
to Europe or North America, should be
wary of these market trends, Dave
Gartside advises, and of the fast-
changing nature of the costs of logistics.
“The big players [among footwear firms]
don’t like this, but they can absorb the
rise in their unit cost,” he says; “that’s
why they’re not in a hurry to source
more in southern Europe. But not
everyone is a big player.”
INLAND CONNECTIONS
Logistics service providers will
always find a way to react to whatever
changes manufacturers undergo. For
example, it’s certainly the case that
footwear factories in China have begun
to crop up in locations far inland from
the major sea-ports. This is fine, Dave
Gartside insists. Wuhan in Hubei
Province is growing as a hub. For $500
dollars, companies can ship a 40-foot
container of shoes or whatever product
they like to the port of Shanghai along
the Yangtze river by feeder barge. This
will add three days to total
transportation times. “Options are
always available,” he says. “Although
we do prefer to have two weeks’ notice
if possible.”
Unsurprisingly, the big shipping
companies take a different view of
recent developments. Maersk Line’s
David Browne, for example, says that
moving ships over the ocean at lower
speeds isn’t only about money, but that
it also gives companies like his, and by
extension
the
consumer-facing
companies they work for, substantial
help in lowering their carbon
emissions. “We can do it faster,” he
says, “but it costs carbon emissions;
reducing a ship’s speed from 25 knots
to 18 knots saves hundreds of
thousands of tonnes.”
Customers, of course, want
transportation times to be short, but the
key, according to Mr Browne, is
reliability. So in an effort to reassure
customers on the question of reliability,
his company introduced a new idea last
year called The Daily Maersk. It’s not a
corporate newspaper, but a way of
improving on an industry-wide
performance of almost 50% of
containers failing to arrive at the
destination port on time. This leads to
retail groups ordering larger amounts
of buffer stock than they really need
and, with the knock-on effects for
product manufacturers and raw
materials suppliers, generally less
efficient supply chains.
ANOTHER DAY,
ANOTHER SHIP
Maersk Line says its new idea
“ensures on-time delivery from Asia to
northern Europe every single time”. It
has increased capacity to offer a more
frequent service from four key ports in
Asia (Shanghai, Yantian and Ningbo in
China and Tanjung Pelepas in
Malaysia) to three key ports in Europe
(Rotterdam in the Netherlands,
Felixstowe in eastern England and
Bremerhaven in northern Germany),
spreading the port-calls out throughout
the week. Customers’ worries about
departure times, transit times and
waiting times should be a thing of the
past, the company argues, because the
time between cut-off at the port in Asia
(the time by which a footwear
manufacturer’s container of shoes
must arrive at the quayside) and the
time at which the same cargo will
become available at a port in Europe, is
fixed. Shanghai to Rotterdam is 34
days. Yantian to Felixstowe is 30 days.
Tanjung Pelepas to Bremerhaven is 26
days. Cut-offs in the past have often
been weekly, and in some cases set in
stone for a period of two or even three
weeks, making the consequences of
missing the boat potentially very
serious for any company that needs
new stocks of shoes in shops in Europe
for, say, a season’s start. As the name
suggests, The Daily Maersk offers a
daily cut-off, so that if buyers in Europe
order 10,000 extra pairs of a
particularly popular pair of sandals at
the last minute, the consignment can
leave on Wednesday instead of
Tuesday and still reach stores on time.
“We feel this can make a huge
difference,” David Browne says. “We can
take the buffers out. Buyers can change
the way they buy because they won’t
need all that buffer stock. Yes, it’s only a
few ports at the moment, but these link
well to many of the main footwear
manufacturing hubs in Asia, so I think
it’s good news for your industry.” He is a
seasoned observer, having started at
Maersk just as
World Footwear
was
being launched. At that time, the largest
container ships could carry an
equivalent of 4,500 TEUs; now the A.P.
Moller–Maersk Group’s E-Class can
carry almost 15,000 TEUs. The Daily
Maersk is an idea that shows logistics
excellence can also be about becoming
smarter, not just bigger. The company
believes clever footwear manufacturers,
and other consumer product companies,
will be able to use it to respond more
quickly to market demands, lower
inventory and save money.
Containers arrive from China at the Port
of Hamburg.
CREDIT: PORT OF HAMBURG