Will take on page

Will do on page

With the Chinese manufacturing industry accounting for 63 per cent of footwear imports and a staggering 74 per cent of clothing imports into Australia, the logistics trade is facing a new set of hurdles when it comes to offshore distribution processing services.
Bruce Haines, Managing Director of Dean World Cargo says that the demands from retailers have intensified over recent years. "Freight forwarders - particularly those involved in servicing the time-critical fashion garments industry - are under increasing pressure to minimise the time span between the sourcing of consignments from China and Hong Kong and delivery to final destination."
The move comes at a period when major national retailers are considering domestic manufacturing in an attempt to curb excessive supply chain lead-times from Asian countries. One of the most notable shifts came in November 2005 when the Bonds group announced it would manufacture more garments in Australia after waiting 12 to 16 weeks for garment consignments from China.
Richard Abela, head of manufacturing and supply for Bonds, says the change has had a positive effect on the company's production chain. "Since we shifted more of our manufacturing onshore, we've had more and more interest from the local market with initial orders growing in momentum. Retailers are becoming frustrated with waiting for supplies from China and while it's more expensive to manufacture in Australia, the benefit is providing speed to the market. There's no doubt that now, we can get from start to finish within four weeks."
According to Roger Sayers, a consultant for Australian Retail services, the Bonds Group is not alone. "Retailers have now come to the realisation that they have the ability to shorten supply chains by looking at alternative sourcing. This means that it's also easier for them to respond to changes in the market and subsequent investment in lower inventories."
The main hurdle facing the industry in shortening lead times is pressure from American and European textile importers whose trade quotas are increasingly greater than those of Australian traders. Since China's accession into the World Trade Organisation in 2001 and the abolition of quotas on textiles and apparel around the world in 2005, fashion imports from Asia have jumped in the US by 75 per cent: from $701 million in 2004 to $1.2 billion in 2005. This means local importers have had to compete with the extreme demands placed on factories in China; placing an inevitable lag on Australian importers.
Abela says this is one of the key reasons behind the move to push onshore production. "When we were placing orders for 50,000 units of clothing, companies in Europe were ordering 500,000 units at a time."
Sayers also believes this is causing issues for other companies in Australia with retailers having to wait anything up to 35 days for the stock to even be available for shipment from date of order. "Then shipment by sea takes about 12 days plus around four days clearance making a total of seven to eight weeks. Delays could add up to another four weeks, giving some 12 weeks before goods are available for selling."
He also says that while major companies like the Bonds Group are feeling the brunt of delays, the impact on smaller boutiques and businesses is equally significant. "On top of China's booming economic trade, there's also the increasing market penetration of the discount department store sector in Australia who source fashionable and well-priced garments from Asia," Sayers explains. "This impacts on delivery times to the smaller chains and independents who are not able, or prepared, to organise their own supply chains."
While this may lead retailers to manufacture locally, Haines is confident Australia's longstanding relationship with China will ensure continued growth in imports and trading.
"Australia remains of major importance among China's export markets, especially in the light of the quotas that have been imposed on Chinese goods by the US and European countries. The flow of Chinese goods into Australia will tend to occur in a steady flow rather than by way of the rapid, massive increase that occurred internationally."
Offshore distribution services are already looking to streamline their inventories and introduce new services for Asian garment consignments to curb further delays.
"Recently, Dean-Wako introduced a store-ready service component. This provides for garment consignments to arrive in Australia and New Zealand ready for delivery to retail outlets, obviating the need for additional handling at this end," says Haines.
Services such as this are set to supplement more traditional shipping practices which usually involve Sara Carden, PR and Sponsorship manager for DHT, says the company's offshore distribution services have also received some innovations. "To date we've invested more than $ US273 million in China to expand our coverage, infrastructure and staff to better respond to the growing demand for supply chain services. In fact, we have a dedicated DHL Fashion Strategy to suit the complex needs of the industry."
While retailers can expect some relief from these innovations, China's Haines warns that China's economic development could throw up more hurdles in the future. "Any change in the value of the yuan could affect the industry. A further re-evaluation would make Chinese goods slightly more expensive."