The Role of Freight Forwarders in Global Sourcing: an Empirical Study in the Apparel Industry



The Role of Freight Forwarders in Global Sourcing: an Empirical Study in the Apparel Industry

Authors

L-Y Wang, E Gouvernal, INRETS, FR

Description

An empirical research in the apparel industry with a specific perspective of transportation and logistics organisation which helps to understand how freight forwarders insure an efficient flow of goods when apparel firms practice global sourcing

Abstract

Global sourcing is an often used strategy for enterprises to reduce the production cost. It is also a popular issue in management research. The smooth goods movement is a necessary condition which enables the practicability of global sourcing. To guarantee a smooth goods movement, freight forwarders are main actors who organize the transportation chain and who work directly with enterprise customers. They act as intermediates between shippers and transportation carriers. Most enterprises contact freight forwarders as the only window for transport organization and a great part of shipping volume is sent to carriers by freight forwarders. It is therefore surprising that there is relatively little literature about freight forwarders in the practice of global sourcing.

As a labour intensive industry, history of global sourcing in the apparel industry can trace back to the sixties in the twentieth century. The structure of this industry is quite complex and integration within the industry is not as common as others industries like electronics or automobiles. Most exchange of goods happen among different companies not belonging to the same group. Small and medium firms exist numerously in the apparel industry. Thus a network of transportation arranged by a large number of freight forwarders is very common. An empirical research in the apparel industry helps us to understand how freight forwarders insure the efficient flow of goods when apparel firms practice global sourcing.

In this research, we have interviewed every actor in the apparel commodity chain, retailers, trading companies, subcontract producers.... A lot of subcontractors and trading companies interviewed are located in China, Hong Kong and Taiwan, and retailers interviewed are located in France, China, Hong Kong and Taiwan. Each actor has his different role in the global value chain. We enquired how they deal with their transportation of materials and goods, how they define everyone¡¦s responsibility, what their concerns about transportation are, and how they work with their contract freight forwarders or logistics companies. We have also interviewed freight forwarders and logistics companies working in the apparel industry. The scale and working content of these companies varies a lot, and so is their strategy. By these interviews, we can know how the movement of goods are arranged among all these different actors, from suppliers to retailers. The way a brand chain deals with their transportation and logistics is different from that for a department store or an independent retail shop. What a small forwarder can offer to their customers might be different from a global freight forwarder.

Although the literature on apparel industry is already abundant, the researches on transportation in this domain are still not sufficient. The results of our research complete it with a specific perspective of transportation and logistics organisation, and clarify the important role of freight forwarders in the function of physical distribution. Relationship between shippers and forwarders is quite long-term and stable, especially between SMEs (Small and Medium Enterprises) and forwarders. Usually, forwarders know a lot about international trade, so sometimes they act more than a simple contractor of transportation for their customers. Moreover, some forwarding and logistics activities are integrated to conventional activities in the apparel industry to insure a more efficient commercial flow. We can say that in the research, we not only figured out the conventional business model in the apparel industry but also found a great variety among different actors.

Publisher

Association for European Transport