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China Rail Import – one Road One Belt

Case Study | Production of promotional items for a large retailer was delayed. The task was to find a cost-effective alternative with regard to the threatened penalty costs.

THE TASK:

Production of promotional items for a large retailer was delayed. The only way left to deliver the goods from China to the distribution center in Germany by the agreed delivery date would have been to transport the goods as air freight. However, this transport option would have been very expensive and therefore not ideal. The task was to find a cost-effective alternative with regard to the threatened penalty costs.

THE SOLUTION:

Instead of air freight, rail containers were chartered in place of shipping containers. A Chinese/Russian rail link to Poland was also used. From there, the goods were transferred by truck to a German importer following fiscal customs clearance.

THE RESULT:

Based on the condition agreements, the FMS office in China coordinated the loading dates with the factory. The freight was booked on site with the railway operator on behalf of FMS. The factory took responsibility for providing and stowing the empty containers. The containers with seals were picked up by truck. These were then transported to the nearest railway station (such as Xian and Chengdu). Export customs clearance was handled in China. As a result of gauge changes, the containers had to be modified near Brest-Litovsk (Russia). They arrived in Małaszewicze (Poland). From there, the trains for various destinations in Northern Europe (from Hamburg to Vienna and to the Dutch border) were reorganized. With the help of a customs broker (i.e., tax-free import into the EU and delivery to the retail distribution station in Austria), the goods were picked up by truck from Małaszewicze (Poland). The entire shipment (EXW= ex works to DAP = delivered at place) took 18-20 days instead of the 35 days required for transport by sea plus onward carriage.

COST COMPARISON:

Sea freight and delivery approximately $2,500 (2%)
Rail (all inclusive) approximately $7,000 (5.6%)
Air freight approximately $25,000 (20%)
Threatened penalty costs from the retailer to the German supplier of approximately $125,000 (100%)

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