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BASEL: In a further move to expand into the circular economy, Panalpina has formed an alliance with Hong Kong-based Spread Logistics to collect faulty consumer electronics from origin, do failure analyses and, when required, arrange for product returns to the manufacturer for repair in Mainland China.

Despite international regulations requiring any smart device produced in China to be returned to the manufacturer if under warranty, the process is difficult according to Mike Wilson, Panalpina global head of Logistics. "The faulty products need to be sorted by fault code and correctly repackaged in their original form to meet Chinese customs demands before they can be sent back to their original manufacturer."

The process is called Return Materials Authorization (RMA) and Hong Kong's Spread Logistics is one of the few companies specializing in the return of electronic consumer goods to Mainland China. As a result, a large percentage of devices re-imported to China via RMA for repair is shipped by the company says Panalpina.

"By partnering with Spread Logistics, we have enabled the circular supply chain for our technology customers. We collect and pass on the data that is needed to decide if a product can be repaired close to the consumer market or if it needs to be shipped back to China for bigger repair work or even disposal," Wilson explained.

Panalpina DubaiTo manage the RMA, Panalpina has set up in Dubai (right) the first of four consolidations points to act as return centers for consumer electronic goods that will conduct first-level failure analysis (screening) to determine their condition.

If Panalpina can, it will repair or refurbish the broken equipment and return the product to the supply chain for reuse. "Screening in the region means products can potentially be returned to available stock faster," said Spencer Edmonds, global head of Logistics operations at Panalpina. "This improves the cash flow of our customers."

Products that cannot be repaired regionally are forwarded to Spread Logistics in Hong Kong for second-level analysis (checking at component level) and repackaging.

Customs regulations require manufacturers' returns to be in the original box, complete with documentation and accessories. "Since many customers don't return products this way, Chinese Customs can be tricky to maneuver," added Edmonds. "Our partner is adept in dealing with reverse flows, receiving returned products and making sure they are repackaged properly to re-enter the country."

For products that cannot be repaired, Spread Logistics can also recover the high-value parts: "The production of consumer electronics – such as mobile phones or laptops – involves more suppliers than ever," said CEO Jennifer Wang. "With excellent IT systems and easy-to-use platforms, we provide a scalable solution to manage the flow of components back to their various suppliers. We can connect anything to anyone."

Panalpina says the deal with Spread Logistics gives the 3PL opportunities to expand into an increasingly circular economy: "Supply chain is about the whole life span of a product," added Wilson. "Ultimately, the real meaning behind a supply chain is a product's life cycle – from sourcing to recycling and disposal. The future therefore lies in managing the product life cycle, not the supply chain. That's where we are heading with our approach to logistics."

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