How Lenzing is using blockchain to create transparency and has embraced rail transport

“A reliable supply chain is important to customers and will become even more so in the future”

cargo-partner and the international fiber manufacturer Lenzing have been working together for more than ten years. In October, the two companies collaborated on a block train from Austria to China. We took this as an opportunity to talk to Lenzing’s Marco Schlimpert about blockchain technology in textiles, transparency in the supply chain and the production of protective clothing.

Lenzing is an international fiber manufacturer that creates its ecologically responsible products from the renewable raw material wood. After years of successful collaboration, particularly in the area of seafreight, Lenzing recently approached cargo-partner due to a short-term increase in demand from China and asked for a reliable transport alternative via the Iron Silk Road. In mid-October the time had come and a block train loaded with 46 forty-foot containers of sustainably produced TENCEL™ fibers set off from Linz to Qingdao. Both Lenzing and cargo-partner strategically rely on rail transport via the New Silk Road as an environmentally friendly, fast and cost-efficient alternative to air and sea freight. We took the first joint blocktrain as an opportunity to talk to Marco Schlimpert, Vice President Performance Improvement and Technology at Lenzing.

Lenzing is planning to offer its customers full traceability for goods and raw materials in the near future with the help of blockchain technology. How much progress has been made with this project, and how detailed will the information be once it’s available? By making your production steps fully transparent, are you anticipating a greater level of sustainability and kudos from your customers?

Marco Schlimpert: The Lenzing Group is synonymous with the environmentally responsible production of special fibers that are used mainly in clothes but also in hygiene products. Their great benefit is that, as well as being highly resource-efficient thanks to their closed-loop production, wood-based fibers biodegrade when they reach the end of their life. However, a product goes through a huge network of producers, distributors and retailers on its journey from a raw material to the finished item of clothing. And transparency is often ignored in this process, which doesn’t do consumers or the environment any good.

To make our supply chain more transparent, in May 2019 we launched the “Blockchain Transparency & Traceability” project based on blockchain technology in partnership with TextileGenesis™. Together with TextileGenesis™, we are aiming to achieve an unprecedented degree of transparency for fashion brands and consumers. Using blockchain technology will allow us to maximize the digital traceability of fibers and thus make a key contribution to a greener fashion industry. This new technology allows all customers and partners to identify TENCEL™-brand fibers and the respective wood source at every stage of the production and sales process, right through to the finished clothes. It also enables consumers to check the composition of clothes and the textile supply chain behind them before they make a purchase by simply scanning a barcode.

Thanks to the blockchain technology, we’ve checked the composition, origin, and quantity of our fibers carefully, so our customers can be confident that they are actually using authentic Lenzing products. Together with TextileGenesis™ and well-known fashion brands, we’ll be launching a platform for commercial use in November 2020. Lenzing is working hand in hand with a great many partners in an effort to make the value chain more transparent, from the tree right through to the finished item of clothing.

Tracking and transparency along the entire supply chain are also of critical importance in transport and logistics. What does Lenzing expect from its transport and logistics partner in this respect?

First and foremost, we expect our logistics partners to deliver what and when they say they will. A reliable supply chain is important to customers and is only going to get even more so in the future. This is why we looked for independent platforms right from the start that offer our customers and internal stakeholders greater transparency with regard to data. This is the only way to respond promptly to disruptions in the supply chain.

cargo-partner ships your goods in containers. During the COVID-19 lockdowns in the spring of 2020, carriers decided to take some capacity off the market and adopt “slow steaming” to extend transit times between Asia and Europe. A shortage of containers for shipments headed toward East Asia was also an issue. How did Lenzing overcome this challenge to its global supply chains?

Lenzing has been able to rely on its longstanding partners in these difficult times. We worked together to take appropriate action to secure shipping space and equipment, enabling us to keep our customers supplied at all times. After the lockdowns in the affected countries had come to an end, demand for our goods built up very quickly, which we were able to meet through other measures – such as strategic warehouses in the various countries and trains to China.

Did these developments contribute to making rail transport along the New Silk Road a more attractive alternative for you? Could this transport option, e.g. the recent block train from Linz to Qingdao, become a permanent solution?

Lenzing is currently trialing shifting more freight onto the rails to optimize its own logistics processes, with an eye on meeting climate targets and further improving the standard of its delivery service. In the third quarter, Lenzing became the first company to send shipments consisting entirely of Austrian-made goods directly to China by train. Each of the trains, which started out in Vienna and Linz, covered more than 10,000 kilometers on their journey lasting over two weeks and hauled containers full of TENCEL™-brand lyocell and modal fibers. Transporting the goods by train takes around half the time as the usual route by sea, which lasts several weeks.

“Lenzing has been able to rely on its longstanding partners in these difficult times. We worked together to take appropriate action to secure shipping space and equipment, enabling us to keep our customers supplied at all times.” 

Marco Schlimpert about the expectations Lenzing has of its logistics partner

 

During various coronavirus-induced lockdowns, the international fashion industry and fashion retailers suffered a drastic slump in interest among consumers. At the same time, demand for PPE in operating rooms, face masks, disinfectant wipes, etc. increased. Has your company perhaps been able to benefit from the crisis in this area?

In the first half of 2020, Lenzing faced an extremely challenging market environment, with increased pressure on its prices and volumes due to the COVID-19 crisis. To provide the necessary flexibility, we worked even more closely with our partners and adapted our production quantities and prices to reflect market conditions. Not only the prices dropped, demand for textile fibers also fell as clothes shops closed due to the lockdowns imposed in many places. The slight rise in demand for fibers for medical and hygiene products offset some but not all of the losses we sustained in our clothing business.

Lenzing and cargo-partner are linked by a close and long-standing partnership. How do you see the cooperation between the two companies – and how does working with a medium-sized logistics provider like us differ from such a relationship with the “big players” of the industry?

Partnerships are very important at Lenzing as well as being an integral part of our sCore TEN corporate strategy. Lenzing is a reliable partner to everyone along the entire value chain. Rather than just being concerned with our fibers, we also focus on the needs of our customers and partners and on the requirements of consumers all over the world. We firmly believe that we will only be able to overcome the challenges in our industry if we listen to one another, share our insights, and cooperate. This is why we value working relationships that have endured for many years.

Thank you for the interview.