Industry Insight

Pacific bridge – hybrid freight transport services

Cost-efficient handling of the trade route between Asia and Latin America

Intercontinental shipments of goods are essential in our globalized world. The laptop is made in China, the cup next to it comes from Taiwan and the green tea in it stems from Vietnam. However, goods are not just supplied to Europe. One of the most important trading routes in the world links Asia and Latin America. Connecting these two continents with each other across the Pacific Ocean in a timely and cost-efficient manner is a huge challenge. One solution is the so-called “Pacific bridge” – a hybrid mix of maritime, overland and air services, which provides huge benefits, particularly during seasonal peaks.

Asia and Latin America: a crucial trading route

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 like Chile which has limited industrial capabilities and their major exports are commodities.

Air freight or sea freight: a tough choi

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 air freight. Both these options have their advantages and disadvantages in terms of the transit time and costs. Shipping goods to South America as air freight 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 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. Air freight to South America might be a faster mode, but the goods must also be valuable enough to use this expensive way of transport.

„Present times require flexibility and cost-conscious options to customers“
Christian Ryser | COO Chief Operating Officer LATAM Hispanic Region
Rhenus Freight Logistics in Miami

Pacific bridge: combining sea and air freight

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.

In consequence, the advantage combining air and sea freight shipments and offering a good balance between time requirements and costs to be incurred, the benefits are manyfold. 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 bears 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 are then transported from Miami to the destination countries in South America using existing scheduled air freight cargo departure flights.

The Pacific trade route: for successful trade between Asia and Latin America

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 to 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 of 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:

  • Asia accepts the order and books the shipment to Latin America via North America
  • Latin America confirms the booking and process to Asia and North America
  • The goods are shipped and arrive in Los Angeles ports
  • The US team informs Latin America about the on-forwarding flight details
  • The goods arrive in Miami by truck, and are prepared for air freight dispatch as booked
  • The cargo arrives in the South American destination country airports

Pacific bridge: added value proposition on the Pacific trading route

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 air freight service to South America. Further, because the handling process on this trade route is so well coordinated, it results also in a price reliability with closely synchronised flights. This, together with a competent service provider offers in addition the needed 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, multi-lingual 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 the coordination between the various partners. Rapid coordination, transparency and reliable expertise are just three of many competitive advantages that the Pacific bridge offers customers.

Why combined transportation to South America has become increasingly important

The original idea was to combine sea, overland and air freight traffic between Asia and South America to be less dependent on fluctuating rates and tariffs, 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 the global trade. The prices for air freight from Asia to South America are very volatile and have been permanently rising due to the pandemic.

„The pandemic scenario gives us the opportunity to differentiate us by being innovative in offering shipping alternatives like for example our Sea/Air Service as a Pacific Bridge from Asia via the US into LATAM“
Christian Ryser | COO Chief Operating Officer LATAM Hispanic Region
Rhenus Freight Logistics in Miami

Looking into 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 solution 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.

Are you interested in more information?

Our checklist reveals five reasons why the Pacific Bridge is the optimal transport solution for your goods.

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You can find more information about Pacific Bridge here.

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Comments

For this article there are 1 Comment

Deborah_Droste

20/04/2021 - 15:13

A very interesting article and the checklist provides exciting further information.

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