- Delayed mass deliveries from Asia trigger container congestion.
- Higher logistics costs and discount battles threaten the financial situation of companies.
- Drayage doubles to twelve days on average.
(Bochum, 05/04/2020) A flood of late arriving goods from Asia is currently putting the fashion industry under pressure. Since the logistics centers have been full due to the lockdown, clothing importers are looking for cheap intermediate storage facilities. They are using every opportunity to delay deliveries. For example, containers are retrieved at the ports as late as possible, empty containers are returned to the depots later than normal. At the same time, the clothing trade suffers from the fact that warehouse workers and truck drivers are on short-time work hours. “It is not only the sale of clothing that is disrupted, but the entire logistics flow,” emphasises Ralf Duester, CEO of the software specialist Setlog.
The Bochum-based company has noticed that since April 9th, drayage (the time from the ports to the facilities) within Germany has increased from an average of six to up to twelve days compared to the previous year. This is the result of a Setlog analysis among 100 brands connected to the SCM software OSCA. It is dated April 29th.
The German Federal Association of Economics, Transport and Logistics (BWVL) had already pointed out a few days ago that the warehouses of companies were “full” and now “too many goods” were suddenly arriving in Germany from Asia. Experts assume that additional logistics costs for short-term interim storage will put further pressure on the already financially strained clothing brands and importers. “Very few companies will be able to compensate for the losses that have been incurred so far due to the loss of sales,” stresses fashion expert Duester. He expects many companies to start discount campaigns now. The large department stores in many German federal states are also faced with the fact that they can open but have to present their goods on less than 800 square metres of sales area. “Especially in the fast fashion sector, where collections change every few weeks, it is questionable whether goods will even be brought into the shops anymore”, says Duester. Shirts, trousers & similar products, which were produced late in Asia due to the Covid-19 pandemic, will have to be stored until next year in some cases, he said. In the worst case, suppliers will also destroy unsaleable goods.
Duester advises fashion suppliers to research all logistical possibilities and then implement them with the right partners to save money. But the options are limited. In ports like Hamburg, for example, containers are already piling up and terminal operator HHLA is already looking for space outside the facilities to avoid chaos. To give them more time, importers can retrieve containers later than usual. However, if companies exceed a time limit, fees apply in all ports. „A 40-foot standard container will then cost up to 400 euros per day. Especially in the fast fashion sector with low margins, such high additional logistics costs make no commercial sense from a business management point of view,” says Duester.
Contact
Nora Breuker, Marketing Lead
Setlog GmbH, Alleestraße 80, 44793 Bochum, Germany
P +49 234 720 285 78, n.breuker@setlog.com, setlog.com
About Setlog
Setlog Holding is a provider of tailor-made Supply Chain Management (SCM) software solutions. The central product is the cloud-based SCM software OSCA®, which is used by over 150 brands in the apparel, electronics, food, consumer goods and hardware sectors. With the help of OSCA®, companies connect their customers with suppliers and service providers to optimally coordinate their supply chain, accelerate processes and manage supply chains efficiently. Setlog GmbH is a wholly owned subsidiary of Setlog Holding AG. Founded in 2001, the company is now a leading provider of SCM software with over 40,000 users in 92 countries. The software company employs 60 people between Bochum (headquarters), Cologne and New York. www.setlog.com