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Issue 2 2012


///APPAREL / NEWS ANALYSIS


Does your supply chain cover you completely?


Logistics firms need to be agile and responsive to meet the needs of the garment industry, as they look to respond to rapid and complex changes – and ensure that customers are never leſt ‘in their altogether.’ The fashion industry is one


sector where a ‘one size fits all’ approach definitely doesn’t work, says Redhead International. Speed and complexity walk


are a fact of life in business but this is particularly true of the apparel industry. Challenges range from uncertain product demand, highly diversified inventories, strict product pricing, and complex supplier selection – not to mention continuously changing styles and seasonal trends. The intense pace, coupled with increasingly truncated ‘seasons’, has significant implications for all facets of the


fashion trade - especially the logistics chain. The winning manufacturer is


often no longer the one with the best product but the fastest and most efficient supply chain. As speed and turnover become the defining characteristics of the apparel industry, so the supply processes and systems of freight companies have become more complex. Freight specialists in the sector


need to be able to manage the demands of such a dynamic market. A simple one size fits all approach would not work in the world of fashion, which demands logistics providers that can tailor their services to the requirements of the customer. For Redhead International,


working with apparel companies has meant developing an operational framework flexible


The winner is often not the best but the fastest


enough to meet their customer needs. Marketing manager Austin Duffy, says:


“Previously, clients


may have accepted the need to either scale up the delivery or bear the costs for a sub sized load, but now they want to pay only according to their needs. If the order necessitates only two pallets, then two pallets is all they want to send. We have created a service to match.” But establishing this level of


certainty is not simple and needs highly developed logistics systems. For Redhead, active in the Euro- zone, Russia, CIS and North Africa, this has involved comprehensive restructuring in order to deliver West European levels of service in East Europe and North Africa. To


diminish the challenges


Redhead has established strategic partnerships, such as one with Militzer & Munch (M&M) to ensure flexibility and dependability.


Business as usual in North Africa


North Africa is a major area for logistics specialist Dachser as far as the clothing and apparel industry is concerned. Some years ago, Dachser acquired Graveleau and its various subsidiaries, including those in Morocco and Tunisia, and these have gradually been absorbed into the Dachser family


– while in the UK Graveleau’s UK office became part of Dachser UK in 2004. The southern hub at Dartford was created in 2006 and is the consolidation centre for traffic from North Africa to and from the UK.


There is a fair amount of clothing- related traffic out of the UK to


North Africa, mainly materials and components being used to make up complete garments, which comprise the main flow in the return direction. The turmoil


in Tunisia did


interrupt traffic last year, but there has been no long term decline as many in the business had feared,


Why going global is good for us


Connections are the key to a prosperous world says FedEx UK and Europe chief, Michael Holt* Driving this change are an increase


We’ve reached a tipping point in how the world works, writes Michael Holt. The largest economy in the world is no longer the economy of any one country - it is the economy of global trade of goods and services. Countries that are making an impact are those that are connected to the global mainframe, not those that operate within their national silos. In the single global marketplace,


commerce, connection and confluence have come together to create the world’s largest economy valued at $18.3 trillion (see FedEx Connect Website - http://connect. fedex.com/gb/en/#global-trade).


in manufactured goods volumes, a growing middle class in emerging markets and developing countries moving from being from producing to consuming nations (http://blog. fedex.designcdt.com/annual- report-2011-global-shipping). These trends have shifted the


dynamics of global trade, reflecting an evolution in globalisation and changing how the world interacts. At FedEx, the focus on emerging


markets is particularly important today because, in general, companies are relying on the expansion of high- growth markets to compensate for


stagnation in the developed world. Three years after the financial crisis, the balance of economic power has been changed. Emerging markets, such as Brazil, China and India continue to grow and provide important opportunities for trade and investment. They are now seen as sources of new consumer demand rather than mere low-cost production centres. Rising consumption in Asia, fuelled partly by an expanding middle class, will produce a host of new opportunities for trade – both in terms of their domestic market, but also to pave the way for the next tier of emerging markets.


says Dachser UK managing


director, Nick Lowe. “There were some heavy delays at the height of the trouble, mainly due to increased checks in ports, but the situation has improved greatly since then – although there have been a few sporadic strikes and other delays since then,” he says.


International business is also


being reshaped by new emerging trade


trends. Rapid expansion


in exports and imports between newly emerging economies; a redistribution of global supply chains which include emerging markets to drive competition; and a sharp rise in commodity and infrastructure trading powered by the development of emerging economies around the world have all been catalysts for change. The opening of new trade corridors and the continued strength of international powerhouses like India, China and Brazil have helped drive global trade. The


growing prosperity of


these countries, as they take on an ever greater role as consumers and producers of traded goods also opens up new opportunities for other developing countries like Vietnam and Indonesia, as traditional manufacturing centres increasingly set up shop in new markets. A recent Economist article revealed that in May 2010, Vietnam overtook China as the largest maker


It’s a two-way affair as European chains look further afield


Gilbert den Bekker, vertical market director for retail and fashion at Geodis Wilson says that whereas fashion logistics used to be a one-way traffic, with huge quantities of Far East- made shipped to Europe and North America, nowadays it’s very much a two-way trade. “Classically, Asian countries like China and India were a sourcing market but they have now become important consumption markets in their own right. And rather than bring everything to Europe and then ship it back to Asia, retailers want to have their own set-up there – which saves money and reduces their carbon footprint.” With the retailers’ operations in


Asia still small and the market still developing, most are unwilling to sink huge sums into setting up their own distribution centres and this gives a window of opportunity to logistics firms who can provide facilities on a third-party basis. “The situation makes them more inclined to outsource,” says Bekker. “Owning property can still be quite a gamble for them.” To some extent, firms like Geodis can use the existing facilities that they already operate for the fashion export business. Another trend that has been


developed is for fashion retailers to offer a much more mixed portfolio of stock – hence the decision by Geodis


of Nike shoes – a sign of the changes that have happened and a signal for things to come. The article stated that while China is not about to be abandoned as a production hub, the economy is shifting to higher-value- added industries, making nearby, lower-wage locations have become more attractive. For example, in 2008, Tomy Takara, a Japanese toy company, announced that


it


was shifting 30% of its Chinese production to Vietnam; in May 2010 Vietnam overtook China as the largest maker of Nike shoes. But global trade is not without its


challenges. Economic and political volatility, borne out in the recent Eurozone and US debt crises, has led nations and regions to erect protectionist walls to safeguard the health of their local economies. But this only serves to stifle economic growth in both developing and developed countries. Open access to capital, information, people and foreign markets offers the best hope for current and future prosperity for people around the world. At FedEx, we


to rebrand its fashion division as Fashion & Lifestyle about a year ago. “Most of our customers’ stores also sell all sorts of accessories like sunglasses, fragrances and even household items” - so what started as a purely fashion logistics operation is now responsible for all sorts of other goods as well. Many factors combine to make


fashion logistics a supremely challenging area, Bekker continues. One is the very volatile supplier base, along with the huge number of


different lines and all their


permutations of size and colour. Goods that are in heavy demand one season may not be in a couple of months’ time and even if the goods remain essentially the same, fashion buyers swap suppliers more readily than in most other sectors. Even


the classic twice-yearly


‘seasons’ when fashion houses traditionally displayed their new ranges in Spring and Autumn are disappearing, at least in some segments of the market. “A lot of the retailers now have a new collection every month,” Bekker explains. While the move from two large annual peaks is a good thing for the logistics industry, in most other respects the sector is becoming more volatile and its service demands are getting tougher. “You need very lean, very fast processes and planning is crucial.”


are guided by the principle that when individual countries enable trade, they provide benefits not only to themselves but also to other nations with which they trade. Improved market access, more efficient customs, and better infrastructure and business environments offer enhanced opportunities for both importers and exporters. Global trade is at the very heart of


the FedEx business and our network is a critical enabler of the global supply chain. We believe that the growing and evolving global economy presents great opportunities for businesses worldwide, especially as the world is more connected than ever before, and continues to grow more inter-connected. We cannot and should not stop this trend, but we can harness the trend to strengthen our economic recovery, generate growth, and create jobs.


*Mr Holt’s full title is chief executive officer FedEx UK and vice president FedEx


supply operations. chain EMEA and


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