Modern-Day Silk Road Optimizes HP’s Supply Chain

In approximately three weeks, a freight train carrying thousands of Hewlett-Packard notebooks and displays makes its way from Chongqing, China to distributors and customers in Duisburg, Germany. This modern-day Silk Road covers two continents, six countries and more than 6,700 miles.

Despite the distance, the journey is cost-effective and better for the environment than air transport, and it’s faster than ocean shipping.

The new rail route is an example of how HP is improving its supply chain to give us a competitive advantage.

How it began

In 2010, HP developed factories and infrastructure in inland and western China to take advantage of economic incentives provided by the Chinese government. This development would improve the employment conditions of tens of thousands of factory workers in Chongqing who would no longer need to migrate from their homes to coastal cities to find work.

These inland factories do not have easy access to HP’s coastal shipping routes, so HP needed a new way to ensure quick, cost-effective delivery of products. A cross-continental rail route was an operative solution and HP set to work making it a reality.

For a year, HP navigated government and rail import/export requirements in the six countries through which the train travels: China, Kazakhstan, Russia, Belarus, Poland and Germany. Pilot trains began test routes in March 2011, and in March 2012, HP launched the rail route being used today.

Gaining competitive advantage and furthering our commitment to social and environmental responsibility

In a recent visit to China, Tony Prophet, Senior Vice President of Operations for HP Printing and Personal Systems, explained that the rail route is a competitive advantage for HP. He highlighted that it’s a great example of how we’re improving the supply chain to drive speed and value for customers -- and improve costs and cash flow for HP.

  • Cost and time benefits: Air transport from manufacturing sites in inland and western China to Europe is costly, and transporting products to the coastal cities from which they can then be shipped by sea can take up to 35 days. HP’s rail solution is the best of both worlds: it costs one-third the price of air transport and takes approximately three weeks.
  • Environmental benefits: Rail transport results in one-thirtieth of the carbon footprint of air transport.
  • Worker benefits: The rail route makes it economically competitive for HP to keep its manufacturing facilities in western China, driving economic growth in the region and improving the working conditions for tens of thousands of factory workers.

Innovations along the way

In the fall, as the train makes its way from China to Germany, the temperature in certain areas can be below -20 C (-4 F). To protect HP products, our supply chain organization developed an innovative packaging solution that regulates temperature without requiring external energy.

And to expedite the journey, HP implemented a simplified documentation process that reduces the time it takes to move through customs at each border. Every enhancement has helped save time and money.

Learn more about HP’s new rail route: