It has been an incredible journey from the cotton fields to a final product. The cotton has been grown and harvested, spun into thread, woven to a fabric, dyed, cut and sewn back together. However, all of these operations rarely happen at the same location, or even in the same country. So an efficient network of transportation is crucial to make a global chain of value work.
Method of transport
We transport our goods by sea, truck and air. We strive towards keeping our number of shipments to the minimum, and to send as much as we can by sea shipments. The obvious advantage is that it is less costly to send in big bulk shipments, which is also more friendly to the environment. Shipping by sea dwarfs any other method of transportation in terms of CO2 emissions, the bigger the vessel the better.
In the world of shipping, time is your constant enemy. To be able to ship by sea, you need to plan very long ahead of time. For example, shipping a denim by sea from Japan to Portugal will take around 60 days. This of course assumes that the denim we need is on stock in Japan. If not, you need to add a few more months to the equation.
Taxes and costs
International shipping is a complicated business, and there are a lot of rules and standards which needs to be followed to avoid any delays or mistakes. During the transport through our chain of value, many taxes are applied. For example the cotton is charged 3.1% duties upon import to Japan. Then, after it is spun and woven to a fabric, 8% duties are charged when importing it into the EU. Finally, duties can also be added when exported to a country outside the EU. For Norway the rate is 10.7%.
As you can imagine, transport and taxes is a significant cost during the manufacture of a product, and is important to remember when considering the final price of the clothing. Sales tax (VAT) is also added to the final price, in Norway set at 25%