Excerpt from: China Supply Chain and Logistics Strategy
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| April 21, 2006 | | Inland Train and Sea Shipment Methods | Many foreign MNCs selling in China’s domestic market are faced with the challenge of determining how to configure and optimize their distribution networks in China. A common import model would consist of importing containers into the ports of Shanghai, Shenzhen, Tianjin, and Shenyang. Containers would then be unloaded and the contents distributed by truck to regional warehouses.
As foreign companies become more mature in the China market they begin domestic production. As importing is no longer required the companies need to devise new distribution network strategies which can take advantages of the new conditions available to them as domestic manufacturers.
Benefits of Inland Train and Sea Shipment
One interesting option which is being implemented successfully by some foreign companies manufacturing in Shanghai involves the set up of an inland train and sea transportation hub in Shanghai for distribution to regional warehouses throughout the country.
- Cost savings can be achieved by this method since container shipment by sea and train costs about 50% of shipping by truck.
- Damage rates are better controlled.
- There are 7 day free demurrage days at the destination ports which can be used to balance daily arrival and over stock at the warehouse.
Disadvantages of Inland Train and Sea Shipment
- Longer lead-time vs. truck shipments
- Need to have a contingency plan for late arrivals
- Summer typhoons
- Vessel technical issues
- Cancellation of train shipments during Chinese New Year
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