I interviewed Christoph Szakowski who discussed Supply Chain and Logistics - Current Trends in China.
My name is Christoph Szakowski. Since I graduated with MBA from Hamburg University I have been involved in international management and consulting roles for the logistics and shipping industry. For 7+ years plus I was with DB Schenker in regional responsibility for Eastern Europe and for Russia for example and for 6+ now I have been working as company’s advisor and interim manager in several roles which brought me also in the period of last 3 years or so closer and closer to the Asian Market, in particular to Central Asia and most of all China. Currently I am on a business trip in Shanghai learning more about the country and also giving some project advise for companies dealing with the New Silk Road Logistics.
What are the trends discussed currently in the China logistics and intermodal market?
Actually I had a good chance to be on the pulse of that what is happening in the intermodal market for Asia, and especially in China as I visited an exhibition called Intermodal Asia for a couple of days where I also was privileged to be amongst the speakers and experts.
Now, what are the trends?
One of this is the ideas of smart shipping. So all about strategies and technologies to encourage greater capability and profitability in the global container shipping supply chain We need to keep in mind that the global container traffic in China amounted for 200 million TEUs which is 4 times bigger that for the USA and 7 times larger than for Singapore. Also China is number 1 country as Logistics Emerging Market so huge development potential if companies apply wisely, automation, digitalization, platform collaboration, smart ports, big data in tracking etc. Another trend discussed is environment protection so China’s policy on multimodal, on standardization and improving land port operation together with cross border intermodal service rules.
There is also something I would call supply chain optimization by freight forwarders to optimize the whole network and not only their own profit. This discussion I picked up more and more often in China currently We observe also that shipping companies strengthen their control of terminal resources like Cosco Shipping with Piraeus port. Also ports are investing in shipping companies. So it is a very dynamic market and it goes in several constellations and directions.
Last but not least - that has been the key topic in the Industry Leaders Strategy Summit in Shanghai - the current and future development in One Belt and One Road initiative and its impact on the future of trade in Asia and internationally. This theme is something I am really passionate about because I have been in the grateful position to develop business on the One Belt, One Road both as logistics service provider in a top executive role and as a consultant and advisor on companies strategies.
Which are strategies logistics service providers choose for the One Belt, One Road geography
There are obviously different scenarios for companies depending on some original factors regardingthe logistics company In discussion , so its philosophy and background , but generally speaking we have identified 5 types of core strategies :
Network mega expansion is the first one. We could give here the publicly known case of Kerry Logistics , the Chine based integrated logistics provider with the CIS specialist Global Link. The vision behind it is clearly to establish a global footprint by expanding the product portfolio and the geography.
The second would be something I call product-based cooperation with some agreements in the first period . A case recently published was here Nippon Express making an agreement with KTZ (Kazakhstan freight rail and passenger carrier). The short-term objective here is improving the rail service offering by giving one partner the access to the infrastructure of the other. What probably will follow will be targeting some group of clients / verticals for example fashion industry automotive suppliers, food, either east- or westbound.
The third scenario companies is chose and this is really interesting is the innovation in for example in rail – based solutions where there is special software used for rates calculations and shipment tracking and this model combined with physical presence with offices along the New Silk Road could be a promising strategy for differentiation from another players.
We see also , especially in Europe for this moment, joint -venture strategies where companies of similar values, family owned , similar size with asset-heavy model come together. They want offer in the One Belt One Road “first class end-to-end intermodal rail and logistics solutions”
There is also common interest to focus on a particular group of clients like cosmetics, pharma, packed goods, fashion, high – tech , automotive, time-critical and also to end with there are some small, flexible , local freight forwarders which see their strength in a flexible and near to client approach and serving on some particular trade lanes like Kazakhstan-South East Asia for example
Which are the recommendations for logistics companies seeking to establish or expand their footprint in Belt and Road geographies
In general I am recommending the top management to do the following:
- Demystify the legends which are in the meantime often evolving emotionally in connection with the New Silk road. So deal with the facts , trade lane statics ,your assessment of your service either in multimodal, rail ,road or sea freight.
- After you made a decision and you are sure in which of the 6 trade corridors associated with the New Silk Road you will be focusing , go to implementation
- Than it is already nothing more and nothing less than a question of a smart management. Very often it works well to start with a local team coordinated by an experienced expat manager who acts like a middleman to the company’s’ head office possible and also person to train and develop the local staff.
- Last but not least – be cautious and put your radar on cross-culture aspects. One Belt, One Road is a vast region and you deal there normally with WesternEuropean culture, Eastern European culture and the Chinese way of doing business. So be here wise to do it right with hierarchy, decision-making , communication style and the way how to motivate people.
So if you apply this frame work , you might improve your profit from the investments you do as a logistics company.
My personal observations based on the business trip to China
In all my times spent in China I quickly try to absorb and learn and I always see that there is a lot of energy and entrepreneur spirit in local people I meet. There is large openness to learn by the decision makers and I believe in consideration of that what I said earlier regarding tendencies on China’s logistics market that is a crucial aspect.
Last but not least this is a growing market even if is huge already where all this New Silk Road initiative started and my personal observation is that global leaders need to directly involve into this country’s specifics . For my part I am happy I have had this occasion and this is good for my personal horizon and competencies.
About Christoph Szakowski
CEO / COO / MD / VP /Logistics / General and Interim Manager in CEE, CIS, Asia, Emerging Markets