Logistics is one of the major issues the fashion industry is grappling with these days. The current situation is alarming especially for the apparel manufacturers who are at the receiving end as the pandemic has only made the prolonged issues even more critical! Not just delivery time, but the cost of shipment has also skyrocketed to reach all-time high. Amidst a difficult phase, DB Schenker – one of the globally-renowned industry leaders with more than 22 years of logistics experience – is supporting the industry and trade by developing a flexible supply chain management system that enables brands and manufacturers to respond to new market requirements, such as increased demand or short lead times. Team Apparel Resources (AR) got in touch with Suresh Kumar Kannappan, Chief Commercial Officer (Indian subcontinent), DB Schenker to get some insights on how DB Schenker is addressing current issues and ensuring seamless solutions. Here are the excerpts.
AR: Apparel export industry is under unprecedented pressure today due to global supply chain disruptions. According to your experience, what critical challenges apparel factories are facing due to these disruptions? And how is DB Schenker addressing these issues?
Suresh: The COVID-19 pandemic has inflicted devastation not just on the health of people but also on economies. We have witnessed a high level of disruption in the global supply chains for all types of products across all industries, including the global apparel industry. While the worldwide pandemic has transformed nearly every facet of economic and social life in the region, the impact of COVID-19 crisis on garment supply chains has been largely mediated through three main channels:
- Factory closures
- Falling consumer demands
- Supply chain bottlenecks
Due to the relaxation in curbs, things are coming back, factories have started working at full capacities, and consumer demands have increased, but the supply chain continues to impact factories.
Towards ensuring ease of the supply chain constraints, DB Schenker in India, an integrated logistics services provider, operates and shapes the transportation network of the future, including land transport and airfreight, ocean freight and contract logistics. Speed, flexibility and efficiency are key in the retail industry. That’s why numerous retailers across the globe trust DB Schenker in India for their fashion and retail supply chain management solutions. We work with our customers to develop a flexible supply chain management system that enables them to respond to new market requirements, such as increased demand or product launches. We also ensure the supply chain is supported with quality checks and equipped with the latest e-commerce solutions for order fulfilment and distribution.
AR: Despite some relaxation in recent months, international shipping costs are likely to remain high in 2022 and even in 2023. The cost of shipping a 40-foot container is as high as US $ 11,000 today as compared to US $ 1,300 during pre-pandemic time! Apparel manufacturers are already suppressed with tight margins and skyrocketing freight costs are creating more pressure on them. In terms of affordability, where does DB Schenker stand in its freight charges?
Suresh: Efficiency and high standards are the keys to our success and customers. At DB Schenker, we have the expertise to manage customers’ logistics and transport needs, all from one place. Whatever the size and nature of their business, and however complex the operations, we’ll take care of the logistics by road, rail, air and ocean.
DB Schenker’s ocean freight ships more than 5,500 containers a day to ports worldwide, making us a top forwarder for the ocean freight shipments. We collaborate with carriers to bring a competitive cost advantage with a more guaranteed capacity which avoids supply chain disruption and unprecedented costs incurred for expediting the shipments. We have our air capacity, which is controlled by Schenker vs market capacity, which allows us to prioritise movements for the EU and US depending on the criticality of the shipment and available commercial capacities.
AR: Container availability is another issue apparel factories are grappling with. Big groups are still able to book containers, but small factories are finding it an arduous task to get containers available for their shipment. How effective is DB Schenker for small and mid-level factories, particularly in Asian countries such as India, Bangladesh and Sri Lanka, etc.?
Suresh: At DB Schenker, our ocean freight forwarding products facilitate the global relationships of more than 700,000 customers across 130 countries. Our innovative solutions form the bridge to the sales and procurement markets wherever the customers need their shipments to go. Consistent, reliable sailings ensure that the ocean freight shipments always reach our customers in a timely manner.
Our services ship more than 5,500 containers a day to ports worldwide, making us the number one choice for FCL and LCL shipments. We also offer the most cost-effective solutions – combining air and ocean freight products to save time and money for our customers.
The DB Schenker Ocean product range offers various services to meet our customer’s ocean supply chain needs. Each product has been developed to meet their high standards for comprehensive door-to-door transport services and everything in between.
Early forecasting is the key to guaranteeing equipment availability. DB Schenker works closely with shippers worldwide, developing an advanced forecasting mechanism to make a booking with carriers to minimise disruption and reduce cost. We have also expanded our carrier selection criteria which allows us to provide more than one option for our customers to meet their supply chain needs.
DB Schenker offers a complete range of international air freight, ocean freight, contract logistics and global supply chain solutions from a single source. We cover all stages of the supply chain – from supplier to customer delivery, from reverse logistics to aftermarket support, in different industries such as automotive, pharma, retail and consumer, industrial, electronics, aerospace and others. Air and Ocean products will continue to remain our core product offering with a dense global network, including that in our warehousing and land transportation. Additionally, our charter facilities with reliable air cargo solutions perform well for imports and exports between IN, US, EU and Asia.
AR: What we understand is that feeder vessel generally collects shipping containers from different ports and transports them to central container terminals where they are loaded to bigger vessels for further transport. Do you think this feeder vessel concept impacts lead time of the small factories?
Suresh: Feeder’s vessels are short-sea vessels carrying cargo between a central ‘hub’ port and smaller ‘spoke’ ports. Feeder vessels can be barges or just small ships. In other words, Feeders are the vessels that pick up shipping containers from the smaller ports that have less traffic and bring them to the larger vessels for their main voyage. These larger vessels are known as Mother Vessels, which are big compared to feeder’s vessels and only serve between major ports. Feeder’s vessels feed cargo to mother vessels from smaller ports to large ports for exports and major main ports to smaller ports for imports. The feeder’s vessels help in saving time, considering the mother ships.
AR: If we talk about material handling, how are you managing safety of apparel goods that need to be carried on ‘hangers’ when they are shipped through containers? Is there any special provision/packaging or consignment option in DB Schenker to handle delicate garments?
Suresh: Globally, DB Schenker doesn’t just offer white glove services for luxury fashion but also addresses the end-to-end high-volume logistics needs of the customers. DB Schenker handles worldwide supply chain management for prestigious goods throughout the year.
The logistics warehouse in India provides unique garment and hanger solutions that help apparel brands efficiently move their stock. ‘Garment on the hanger’ is a unique service offering and this is tailored to relevant brands’ requirements for road, rail, ocean and air options as per the transport mode taking into consideration the storage and transit needs of such movements.
AR: Most apparel brands continue to depend upon offshore sourcing and third-party manufacturing. Shorter lead time is something everybody within fashion industry is focusing on; however, there is still a missing link in the collaborative efforts! Where do you feel the gap exists between brands and manufacturers in their approach of going for shorter lead times? How is DB Schenker assisting them in their endeavours?
Suresh: Demand vs. Supply imbalance is a key factor that affects this process. Garment manufacturers are spread across Asia, more concentrated in China, India, Bangladesh and African continent lately.
Most of these countries have stringent labour laws and unions where production disruption is regular. The industry continues to be resource-intensive and not all processes can be automated. The availability of the resource is a major challenge. In addition, the garment supply chain also at times, is heavily dependent on imports of accessories where most of the brands want to standardise the quality expectation. The accessory supply chain and availability also hinders the supply chain flows from time to time.
AR: Majority of today’s logistics and supply chain challenges are new in many respects and older solutions/experience may not be relied upon to find solutions in today’ time. So, how all this complexity can be handled, particularly in terms of design, planning and execution? How is DB Schenker addressing these challenges?
Suresh:Keeping pace with the ever-evolving industry demands, we at DB Schenker in India, with our digital solutions, provide:
- fluidity and transparency to customers,
- real-time instant quotes and
- the ability to book and track a shipment with 24/7 online visibility from pick-up to delivery
Through our digital solutions, eSchenker and Connect 4.0, we aim to make the supply chain process seamless for customers.
Additionally, through our Charter Flight operations, we are addressing one of the biggest industry challenges, i.e., shortage of air cargo capacity. The charter services have been performing well, providing quick supply chain solutions to the customers.
We believe in constant innovation and endeavour to support our customers’ growing supply chain needs in India.
AR:Trends that were apparent during pre-pandemic, such as increase in online shopping in fashion industry, have now got massive boost in pandemic times. How has DB Schenker been able to cope with this increased demand and pressure on the supply chain?
Suresh: For us at DB Schenker, warehousing is not just about storage and distribution but also supply chain orchestration. Before the COVID-19 pandemic, customers would look at their distribution strategy from the point of view of location and cost. However, now the focus is on being omnichannel and having the flexibility to manage the supply.
Through our multimodal solutions, we ensure not only alternate capacity but also provide easy and cost-effective options.
AR: In terms of sustainability, which is on everybody’s mind today, how eco-friendly are your practices?
Suresh: Sustainable business operations is one of the focused areas of DB Schenker in India. Going paperless is our crucial initiative, and today, we are managing the customer needs for imports and exports without being onsite in a paperless manner. We started the process during lockdown and are continually working in a paperless environment, reporting automation, deploying bots for monotonous activities and, most importantly, moving towards digital invoicing with partners and customers.
AR: Moving forward, what are the possible changes that you envisage in the logistics value chain and what is your preparedness for the same?
Suresh: We expect consumer behaviour will change dramatically with most of the urban population getting access to affordable-wear.
The demand-supply challenge will pose a new list of hurdles. The only way logistics partners can support is by being agile and flexible and continuing to drive forecasting requirements across the supply chain, which is key to planning capacities. The manufacturers will become more and more cost-conscious which means early production vs. air freight will be an essential consideration. In high-value segments, airfreight may become a default option to reduce inventory holding costs, and in mid-range and low-range segments, customers are going to move towards ocean freight to reduce the cost per piece they spend on logistics and inventory holding. The logistics value chain will bring capacities and also look at multimodal options from the Far East to US/EU, which will allow for a more cost-efficient supply chain.
