Has rail from China to Europe , taken away the sea-air traffic via Dubai?

I have started to rebuild the sea-air product with new concepts . Its is true that Dubai as a hub has lost almost 40% of the sea-air volumes . Its could be even more . The main reason for this is, the consumer  products available in the market and changing buying habits of the end customers . Everything boils down to cost and lead time .
I could see several reasons for the slow down of sea-air via Dubai . One is for sure the slow steaming adopted by the shipping lines which extends the transit time . From Hong Kong to Jebel Ali , it used ot be 11 days . Now its 12-13 days , sometimes even more days are consumed. The only ocean line (which I dont want to mention the name ) who used to offer a good sea-air service on the ocean leg, has also lost its motivation to keep the commitment on transit times . On the other hand , the retailers have changed the way they hold inventory . Less inventory in shops drive more air if the market picks up. But where have we seen the market picking up in recent days .

The latest buzz is everyone is rushing to do rail freight from China to Europe via Siberian route . China has its ambitions to control the freight from China to Europe , therefore pouring billions to develop this mode of transport . However in my opinion , a very dependable , capacity full filled product is at least 5 years away. I have often argued with people who says , rail is better than sea-air . I agree to a point that it stops at a theoretical point , but not go in to practicality . The reasons are simple . Today there are 3 train hubs in China , Suzhou , west China and North China . The trains line up the cargo at the western China to be carried on to Europe . A 40feet container could cost from a shanghai factory to a distribution centre in France aprox USD 8000 . Its far below the sea-air rates that are available in the market. The maximum length of this train until it reached the European rail standards if only 800 meters . Just calculate and see how many 40 feet containers can you carry every 2 days to Europe . aprox 45-48 containers a train ? I agree that its viable right now as the market is so low and there is no demand . But no one hopes this export market from China to Europe will stay like this for ever . When the market picks up , can everyone get space on a train that carries 45 containers ? think about the demand and supply ? I conclude this point of argument by admitting that rail from China to Europe is a good progress and a great achievement . However its not yet ready to take away the sea-air product via Dubai and other hubs . Once the rail products reach multiple journeys a day to europe and perhaps double stacking the containers , then yet , it could be a good alternative . Not until then .

One the other hand , people who believe in multimodal products like me , will always educate the customers about the benefits of sea-air , air-air and air-sea products . There is no limit to the way you can move freight on multimodal methods as long as you can be creative and knows how to ensure the product works .

I sincerely hope that Dubai government will take measures to speed up the sea-air transshipment process and reduce costs , allowing the freight forwarders to bring in more transshipment cargo to Dubai. Simplifying the process on how Dubai cooperates with Sharjah in terms of transshipment customs , open many possibilities . can UAE government influence the shipping lines to improve the transit time and ensure there is a dependable Ocean capacity and lead time guarantee to jebel Ali ? this could improve the transit times .

Times have come to be innovative in how you do sea-air products .

join my twitter for more news on sea-air : @chamindag1 

other article to read 

http://www.globallogisticsmedia.com/articles/view/sustainable-logistics-find-the-right-mode-of-transport-which-emits-the-lowest-carbon-emissions

http://www.globallogisticsmedia.com/articles/view/a-story-untold

http://chamindagu.blogspot.hk/2014/10/dubai-as-hub-for-sea-air-product.html

Dubai as a hub for Sea-Air product

Its been 7 months since I started to live in the place where I once involved in creating the sea-air products for many companies and customers. I thought it would be wonderful to live in Dubai and still promote the sea-air product. Its still the case , however when you are close to the operation, you tend to see things more microscopic than macro level. I am a firm believer in the multi modal product. I think people who use this product are real out-of-the-box thinking supply chain managers. 

The sea-air product has not evolved so much from the history of 2-3 decades . The good old companies who are doing sea-air have done the same. I felt like after creating BAX Global and Schenker sea-air product when I was in Shanghai , followed by Kerry Logistics and Agility, few new kids in the industry have taken things aggressively to see the benefits of sea-air.I like that as it has spread the word around. However is there anyone doing anything to explore better options , innovative ways of producing the next generation sea-air product ? no I guess . 

The consumer world has drifted far away from the good old supply chain habits . When we had 2-3 seasons of peak demand , now it has become 3-5 with sharp spikes of demand. carriers and providers alike , cannot plan anything as the market is so dynamic . Rates have fallen resulting in low volumes of sea-air. How do you revive the sea-air market and demand ? thats the difference between  people who lead the product innovations and people who follow other's effort and success .

I have been a bit taken back by the developments in Dubai , specially with the changes of transshipment process. I am not too sure if Dubai government is consciously making things difficult for sea-air transhipments or someone is not thinking far enough on the after effects of their decisions . The recent decisions to increase the Terminal Handling Charges (THC) at DXB airport and restrictions of customs clearance process for mix loaded containers for sea-air , are like Dubai saying "we dont want sea-air anymore".But if you look at the GDP contribution of transshipments and supply chain activities for Dubai , it represents a double digit number . Isn't that good enough to protect this product ? Dubai policy makers need to seriously think what to do and how to improve Dubai as a capacity and cost leadership in the multi modal transport industry. Since the rates from Asia to Europe and US have fallen , Dubai government should take measures to reduce cost and offer seamless transshipment processes for sea-air in order to protect and sustain the volumes. Otherwise the lack of options will deter sea-air customers to look for options like rail from Asia to Europe which is happening now. 

Sea-air is becoming commoditised due to lack of innovation. For some companies who have started to do sea-air by copying other's success is considering reducing rates, is the only innovation. thats pathetic and destroying the market for a good sea-air option. 

I have always predicted the next best sea-air hub is Colombo, Sri Lanka. Thats not because I am Sri Lankan but it makes a lot of sense when you look at lead time compression . But unfortunately , the country does not have a strategy and not interested in one either . 

let me give you an idea in my next blog about the specific changes in Dubai in terms or cost increases and processes becoming complicated . I need to find time to write too. thanks /Chaminda Gunasekera , follow me on Twitter #ChamindaG1 or LinkedIn.

How to be creative in supply chain solutions

Being creative is a very unstructured discussion. Each person can be creative in his/her own way. In the supply chain industry , being creative is priceless . Creativity in solutions comes from knowing all products and options like a carpenter's tool kit . Also its essential that one has the ability to understand the problem , break it down to small parts and then find alternatives .

supply chain solution design needs a broader mind and ability to understand and relate to customer issues. The task becomes easier when you have been exposed to different products and different markets. For a person venturing in to supply chain solution design , thinking out of the box and believing in creation of new products ,is very important .

Analytical skills will be the last skill to develop .