Riding the rails from China

Published on 09 February 2018

Running shoes are just one example of how customers can benefit from A.P. Moller - Maersk’s services as an integrated transport and logistics company. A train bringing sporting goods from China to France shows how a broader offering of solutions can make supply chains more flexible.
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City, desert, steppe, mountain, river: the long line of Maersk containers has traced the Silk Road on its 10,800-kilometre journey from crowded China to the industrial heartlands of northern France.

Speeding around the curves of a steep-sided valley, this is the first block train – booked by a single customer and shipped from the same origin to same destination, without being split up or stored en route – to France for A.P. Moller - Maersk. Developed by Damco as part of its growing rail product portfolio, the train delivered more than 40 new containers full of running shoes, shirts and balls to Decathlon.

“It helps us to set up some flexibility in our flows, so our production has several options when it comes to delivering to Europe – sea shipment, train and maybe air as well,” says Bruno Thellier, Chief Technical Officer in China for Decathlon, the French company which is one of the world’s largest sporting goods retailers.

“The joint history with Maersk is a very long one. We started more than 20 years ago and I was there then, with the first contract. So it was very easy to set up this solution with Maersk Line and Damco.”

What customers want

Integrating the A.P. Moller - Maersk businesses is slowly but surely reaping benefits, from Maersk Line and APM Terminals working together to drive more business to ports, to Maersk Container Industry’s turnaround thanks to better coordination with Maersk Line. The block train is another example of how collaboration is benefiting both customers and A.P. Moller - Maersk.

“This is a win-win cooperation between Maersk Line and Damco, and it demonstrates our commitment to develop innovative ways of propelling our customers’ business,” says Mike Fang, head of Maersk Line’s Greater China Cluster.

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A train cannot match the sheer size of a vessel and so it is unlikely to take business away from ocean. Rather, it is becoming an important additional transportation option to give customers more flexibility in their supply chains.

Decathlon is a large ocean freight customer of Maersk Line and supply chain management customer of Damco, so the train was a natural solution, with brands working closely together to expand the range of services offered. Rail transport is substantially faster than ship, and is a competitive alternative to air freight, with a lower cost and less emissions.

“This is an important step towards expanding logistics support to the markets we serve across the regions. The intention is to further explore profitable opportunities to work with customers using both Maersk Line and Damco’s networks, assets and expertise,” says Caroline Wu, CEO of Damco Greater China Area.

There are other services that can eventually be bundled together to bring a more exhaustive offering. For example, regular block trains could arrive from China and connect into Maersk Line’s intermodal network in Europe, and Damco could offer supply chain solutions.

“Rail is picking up quite substantially. Our customers are clearly very interested in this option and we should be part of responding to that,” says Lee Sissons, Maersk Line’s Head of Trade and Marketing in Greater China Cluster.

Cut inventories, cut CO2

Under the grey November skies, the still pristine new containers draw in to a logistics centre at Dourges, near Lille, to be welcomed by an arrival party – a mirror of the departure ceremony and attended by representatives of Decathlon, Maersk Line and Damco, as well as the respective local governments in Wuhan and northern France.

“The joint effort made by these two brands in Transport & Logistics ultimately provides customers like Decathlon with more added value and flexibility,” says Philippe Dunand, Global Account Director for Lifestyle at Damco, who was commercially responsible for setting up the block train. “This also reduces the need to truck rail containers on arrival in Europe, thereby providing more flexibility for the customer.”

As the whole train is for one customer alone, the containers do not have to be transported from a distant port or railhead to the warehouse. Instead, they are simply hoisted off the train and onto waiting trucks, which will take them to the giant 56,000-square-metre Decathlon distribution centre that sits just across the other side of a canal.

There, a team of Decathlon employees efficiently unloads boxes and boxes of shoes, shirts and balls and stacks them ready to be sent out to shops across the country.

“We would like to decrease our inventories in France. This solution allows us to reduce the time to arrive here by 20 days, and it means we can expect to save 10 days of stock in France. And we would like to reduce our impact on CO2, so we can save time and save the impact on the environment,” says Decathlon’s Thellier. “And I’m very happy because the collaboration is very professional and we understand each other.”

 

The Silk Road

Rail services are becoming increasingly important for transporting goods between China and Europe as part of China’s Belt and Road, or One Belt one Road, Initiative.

The initiative aims to develop a China-centred trade network, fostering connectivity and cooperation between countries in Asia and Europe and focusing on infrastructure investments such as railways and highways – a modern version of the Silk Road, the network of trade routes that for centuries connected markets in the East and West

Trade from China is huge and continuing to expand, and more and more customers are looking for a green strategy which offers a more CO2 friendly option compared to air freight.

Given the distances covered and the need for manufacturers to transport their goods efficiently and securely between the two regions, customers can also benefit from Damco’s global supply chain management expertise. The intention is to make the block train service available to additional customers and market sectors.

“Block trains achieve reliable lead times and provide customers with improved cargo visibility through GPS tracking,” says Kasper Krog, Damco’s Head of Rail.

CO2 emissions from rail services are also about 12 times lower than air transport so the block train offers a solution that is efficient, with fixed timetable, cost effective, transparent and with less impact on the environment.

Kasper Krog, Damco’s Head of Rail