Asia is one of the main exporters of goods all over the world. China is viewed as the ‘export world champion’, according to Reuters news agency. The People’s Republic has topped this list without a break since 2009. The country’s relevance for trade is illustrated in initiatives like the New Silk Road – the expansion of the intercontinental trade and infrastructure network between Asia, Africa and Europe. However, Asia is also the most important trading partner for Latin America, particularly for medicines and electrical components. Mining and the automobile industry – two important mainstays of the South American economy – also depend on the trading routes between Asia and South America. Therefore, Asian imports are increasingly important, especially for countries such as Chile, which has limited industrial capabilities and their major exports are commodities.
In contrast to trade with Europe or Africa, Asian imports to South America have to cross the Pacific Ocean. There are two ways of handling this: the goods are either shipped to South America as sea freight or as airfreight. Both these options have their advantages and disadvantages in terms of the transit time and costs. Shipping goods to South America as airfreight takes up to five days. If made a high priority, a shipment can even cross the Pacific in exactly three days, if extra charges are paid. It is true that goods can be shipped very quickly in this way, but the costs associated with this are also extremely high.
In addition to this, air cargo prices increase at seasonal peaks: costs before the Chinese New Year Festival rise drastically and it is the same story during the classic holiday months of the year. Sea freight is a much more cost-effective means of shipping. The expenditure required for ships is significantly lower. However, the speed of goods shipped by sea declines dramatically. A consignment from China to Brazil can take more than 40 days. Ships not only have to cross the Pacific, but also pass through the Panama Canal on their way to the Atlantic Ocean.
To summarise matters, sea freight to South America may be more economical, but it takes too long for time-sensitive goods. Airfreight to South America might be a faster mode, but the goods must also be valuable enough to make this expensive mode of transport worthwhile.
An efficient solution for the trading route between Asia and South America is therefore particularly needed at seasonal peaks, when the air cargo price hits the roof and capacity and delivery times are tight. This is why logistics specialists rely on several different transport alternatives for the handling of International shipments to South America.
The advantage: they combine the benefits of air and sea freight shipments and offer a good balance between time requirements and costs to be incurred. The route is divided into three sections to prevent high costs for customers and still guarantee a reliable delivery time: the goods are first transported by sea from China to the West Coast, Los Angeles. From there, the cargo is trucked to Miami, East Coast Florida in three days. What initially looks like a detour has been carefully contemplated. The city is home to the number one cargo airport and hub in the USA for South America. Therefore, the route right across the USA not only saves costs, but also enables goods to be shipped with a high degree of reliability. From there, the cargo is then transported from Miami to the destination countries in South America using existing scheduled airfreight cargo departure flights.
If a company decides to transport goods from China to Brazil, for example, the process follows a set routine, depending on the service provider. Here is one example. When the transport order is being processed, instructions are first sent to Asia. The local team pre-emptively books the import shipment to Brazil with North America as the intermediate destination. The team in South America confirms this vis-à-vis the USA and the employees working in the country of origin. Miami then passes on the flight schedules for the destination countries in question. The direct, local contact partners and the continual exchange of information regarding the individual stages guarantees ideal process reliability without any unforeseen surprises. The types of goods that can be transported are diverse: only perishable or dangerous goods are excluded from shipment via the Pacific bridge.
This is how the Pacific bridge works:
Thanks to an average transit time of 20 days, international shipments to South America via the Pacific bridge are twice as fast as sea freight. At the same time, the customer saves costs in comparison to a direct airfreight service to South America. Further, because the handling process on this trade route is so well coordinated, it also results in price reliability with closely synchronised flights. This, together with a competent service provider, additionally offers the required high degree of process reliability along the complete route as all the sites involved regularly share information.
The network in the different countries enables smooth communications without any translation errors. Regular, multilingual staff enable an ideal flow of information from the starting point in China to the end of the transport chain in the various South American countries. Customers also have an appointed contact person, who monitors coordination between the various partners. Rapid coordination, transparency and reliable expertise are just three of many competitive advantages that the Pacific bridge offers customers.
The original idea was to combine sea, overland and airfreight traffic between Asia and South America to be less dependent on fluctuating rates and tariffs, and capacity shortages during seasonal peaks in China. The Pacific bridge, therefore, is an effective option for shipping goods to South America, particularly in view of the effects of the global Covid-19 pandemic on global trade. The prices for airfreight from Asia to South America are very volatile and have been permanently rising due to the pandemic.
Looking to the future, it is clear that the Pacific bridge service, which combines needs, prices, time and expertise, will leave a lasting mark on links between Asia and South America.
Rhenus, too, offers ‘Pacific bridge’ services as a combined solution for air and sea freight shipments to South America. ‘With our worldwide network, we are uniquely placed to offer advanced transport solutions with an interesting cost/time benefit twist for our customers through our in-house overall Group control,’ says Christian Ryser. The destination countries are currently Mexico, Colombia, Peru, Chile, Argentina and Brazil.