Creating Solutions for Fashion Supply Chain Disruptions Out of Southeast Asia

IEEPA Refund Calculator Investor Relationship Financial Overview Company Overview Financial Overview Corporate Governance Overview Board of Directors Committees Internal Audit Regulations Shareholder’s Insights Shareholder’s Insights Shareholder’s Report Investor Contact Investor FAQ Contact MyDimerco English繁中简中 Home » Creating Solutions for Fashion Supply Chain Disruptions Out of Southeast AsiaCreating Solutions for Fashion Supply Chain Disruptions Out of Southeast Asia by Dimerco | Jan 26, 2022 Fashion supply chains can’t afford major disruptions. Clothing and accessory items that ship too late for the prime selling season might become “last season’s goods” and go unsold or get marked down significantly. So, when global shipping backups slowed the flow of products out of Southeast Asia in late 2021, fashion brands had to get creative to speed transit time. The Challenge Shoes, apparel and fashion accessories are made by manufacturing partners throughout the world. Cambodia is a prime source for handbags. A typical large fashion brand might ship out 100 40’ equivalent containers of handbags every week from multiple Cambodian factories. When steamship line partners began to regularly cancel sailings from Cambodia during 2021’s peak shipping season due to the pandemic, it created some tense moments for supply chain executives. According to one Senior Director for a major fashion label, “For fashion supply chains like ours, just one blank sailing might hold up 30 containers, so the next week 120 containers need to move instead of 90. More cancellations lead to bigger backlogs. Very quickly, it starts to jeopardize delivery commitments to retailers and may even impact production, as factories run out of room to store outbound goods.” Part of the challenge in Cambodia is that the port of Phnom Penh (PNH) is a secondary port that has no direct sailings to the US. It is an inland port served by the Mekong River. Smaller feeder vessels pick up containers in Cambodia and bring them to larger ports, like Ho Chi Minh City in Vietnam, where they are transferred onto vessels bound for the US. When one steamship line cancels a stop, there just isn’t the container capacity from other carriers serving PNH to absorb the stranded cargo. Multi-Modal Solution Addresses Disruptions Given their large freight volumes, major fashion brands hold direct contracts with steamship lines and book freight directly. But these brands must also maintain relationships with freight forwarders, like Dimerco Express Group, to address unexpected problems or volume surges the steamship lines can’t solve. For a maker of handbags, Dimerco suggested a Road+Sea shipping alternative to address the lack of ocean capacity out of Phnom Penh. This solution for shipping out of Cambodia would leverage the forwarder’s capacity agreements with steamship lines servicing the nearby port of Ho Chi Minh City (VNSGN) in Vietnam, which lies about 240 kilometers from Phnom Penh. Specifically, the arrangement involves the following steps: Have trucks pick up empty containers at VNSGN (1 container per truck) Deliver containers to designated factories in Cambodia and get them loaded Clear customs at the Vietnamese border Return the container for loading on a scheduled ocean sailing out of VNSGN with a steamship line partner At the height of this Road+Sea, multi-modal transport solution in Q4 2021, more than 50 containers per week were shipped out of Vietnam. The Cambodia-to-Vietnam, cross-border trucking process takes 1 day. This alternate solution actually improved total Asia-to-US transit time by 3–4 weeks because it completely avoided the delay associated with getting cargo from feeder vessels onto the mother ship. With the trucking solution, container loading on the US-bound mother ship in Vietnam was quick since vessel space for the container was pre-booked. For cross-border trucking, multiple trucking companies were used. While coordinating the trucking capacity was a significant task, often the real key to success for cross-border road freight solutions is a customs clearance process that is fast, efficient and, most of all, compliant. In this case, the main issue the handbag maker faced was that cargo shipping out of PNH must wait in line at the Vietnam port because the Mother Vessel is stationed in Vietnam and will give local containers in the country priority on available space. The Road+Sea solution alleviates congestion and transit time issues by trucking cargo across border from Cambodia directly to Vietnam, using the shipping liners’ custom bonds and trucking capability. Fast Fashion Supply Chain Solutions for Air Freight out of Southeast Asia When the Pandemic started, similar sea freight capacity shortages hit some fast fashion brands so unexpectedly that they began to ship by air directly out of Vietnam. After COVID outbreaks shut down factories in Vietnam for a time in Q3 2021, production ramped up and the demand for space on air freighters to the US far exceeded the supply. One high-end women’s apparel company was forced to wait 2–3 weeks for air cargo space out of Vietnam to the US – even for relatively small 3-to-5-ton shipments. Such waits jeopardized holiday season sales, so this company worked with Dimerco to shift the origin airport from Ho Chi Minh City to Bangkok, Thailand to secure reliable air freight capacity. Similar to the Road+Sea solution, this Road+Air service involved picking up freight at Vietnam factories and trucking freight across the border to Thailand to avoid the congestion in Vietnam and get goods to market faster. How Freight Forwarders Benefit Fashion Supply Chains Fashion brands that manufacture in Asia and sell in the US must reliably deliver products to consumer markets on precise timelines to meet defined selling seasons. This Asia-centric supply chain model has worked well for many years but has become more challenging due to continuing disruptions caused by the pandemic. According to Alexander King, Branch Manager of Dimerco’s New York City office, “When carrier capacity, labor shortages, or other issues disrupt delivery schedules, fashion brands must adapt or risk millions of dollars in lost sales. That’s where a strategic partnership with a global freight forwarder can be invaluable.” Global forwarders leverage advantages that carriers cannot: Relationships with multiple air and ocean carriers for extra capacity Local country knowledge to a smooth the customs clearance process An ability to coordinate creative, multimodal solutions For fashion supply chains, “time-critical” has always been the most essential characteristic. But in this topsy-turvy freight market, “resilient” has become just as important. Is your fashion supply chain resilient? Dimerco can help you address supply chain disruptions with fast, creative solutions that keep your cargo moving. Our freight forwarding services are ideal for fashion brands whose supply chains run through China and Southeast Asia. Contact us to start a discussion. Post Tags: Air Freight | Asia Pacific | Customs Clearance and Compliance | Fashion and Lifestyle | Freight Forwarding | Multimodal Transport | Ocean Freight | Road and Rail Freight | Supply Chain Solutions We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.ACCEPT Cookie settingsManage consent Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. 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