Leveraging the rail options to transport new cars between China and Europe has been widely considered as one of few flagship cases of utilizing the New Silk Road. As a leading player in the vehicle transportation market, New Silk Road Network member CFR Rinkens actually began their journey with transporting classic cars from the US to Europe. With an eye for innovation, they employed special racks which allowed for the loading of up to 5 cars in one 40’ container, which ultimately lead to a partnership with Tesla and paved the way for them to venture into the new car logistics industry.
In this interview with Mr. Christoph Seitz, managing member and co-owner of the company, we dive deep into the history of CFR Rinkens, their breakthroughs and learnings along the way, and their thoughts on the New Silk Road routes and how it fits a niche market such as finished vehicle logistics.
In conversation with Christoph……
NSRN: CFR Rinkens was established in 1994; since then, it has grown to over 159 employees with offices across the US, Germany and China. Mr Seitz, you were one of the company's co-founders; how did you and your business partner, Mr Max Hoes, set up the company and what has been the journey so far?
Christoph: Actually, I am not quite the co-founder, this is misunderstood a bit, but it makes it easier to tell the story. Max moved from the Netherlands to the US around 1986, in his early 20s. He finally settled down in California, where he started trading classic cars. In short, he was buying classic cars in California and then selling them to people in the Netherlands.
During that process he started working with shipping companies to transport these cars to Europe, and at some point, as he grew the business, he started shipping them on his own.That was how he started CFR in 1994. Back then, it was a very small company with just a few people. 10 years later, I came into the picture and joined CFR.
I had first moved to the US from Germany in 1988-1989 as an exchange student, and since then I always wanted to come back. I got into journalism after graduating high school and then in 1996 I had the opportunity to come to California to become a freelance journalist, working for media overseas. As you probably know, in journalism you can't really make that much money. It was expensive living in California, so I kind of gave up on journalism after having done it for 8-9 years. I think it was a typical American story. I started jumping around between jobs and then one of my friends in LA introduced me to CFR and I joined as a salesperson. From there I worked my way up. I started in 2004 and then basically became the top sales guy.
While CFR was originally a classic car shipping company and the most successful at it, now more than 50% of our business is new cars and FAK. In 2010, I approached Max and said that I would like to be a part of this company and he agreed to make me a partner. That was when I bought in and became a 50-50 partner.
We continued growing the used car shipping business and then Max had the idea to investigate racking systems because we spent so much money using wood to build ramps inside the containers that allowed us to ship 3 and 4 cars per container. In fact, at that point I think we were spending about $300.00 per container on wood. But when the containers arrived, let's say in Europe, and were unloaded, the wood would be thrown away. Racking systems had existed before, and people had tried them. We have seen pictures from as far back as the 80s of different racking systems that people had developed, but nobody had ever done it shipping high volumes of cars.
Max started researching online and we came across a small company in the UK that created solutions for securing freight inside containers. They had a drawing and a concept for a racking system that would allow 3 to 4, or even 5 cars in one 40’ HC container, but they hadn’t actually built them yet. We reached out to them and told them we would like to explore this further, and they invited Max to China where they had a manufacturing facility. In two months, we ordered the first batch of racks! We knew that if it worked it could be a breakthrough. Initially, we used them for shipping classic cars from Los Angeles to Bremerhaven and Rotterdam, which have always been our power lanes for classic car business.
In 2013, we were introduced to Tesla. This was a huge breakthrough for us. We were asked if it was possible to use the racking system to ship large 4-door sedans. We convinced them to let us give them a demo to load 4 of these luxury electric vehicles into one 45’ HC container and within months we received the contract to ship for them. That was the beginning of our venture into the new cars business. We have been shipping for Tesla ever since, not just cars but also different products for their energy storage business. In recent years, we have been developing our new cars business extensively with other OEMs as well, and BMW is now our second largest client.
This is also one of the reasons why we got into the New Silk Road business. Having made a name for ourselves in car shipping, especially containerized car shipping using racks, having good relationships with car manufacturers, and learning more about new routes available is essential for our continuous growth. This is our story.
NSRN: You mentioned that before situating in the logistics and supply chain field, you were a full-time journalist. How does your background in journalism play into your current responsibilities?
Christoph: I think the key characteristic of being a good journalist is that you are able to ask good questions and listen. Based on what you have heard, you are then able to ask more questions. That is typical journalism, and I was very good at that. I think that is why I was successful as a reporter.
This same skill comes in really handy nowadays in terms of sales. I think when you do sales or business development, it is exactly the same principle. You meet with the prospective client. You listen to them; you ask questions, and you pick up on what people are saying. You listen to what their concerns are and try to understand.
My main responsibilities are sales and business development and I think this quality is really my strength. As the co-owner, I must do management as well, but that is not my favorite. Before the Corona pandemic, I was travelling a lot and having meetings in person, nowadays obviously this is replaced by a lot of conference calls.
NSRN: CFR's central business is the export and import of automobiles, auto parts and all things related. With a niche focus such as this, how does CFR stand out in the field? What are the distinctive services offered to your customers?
Christoph: What is unique about us is that we have experience in handling both used cars and new cars. These are two very different markets. Every used car container is different from the next one. It is always a different combination of cars and different circumstances. The new car business however can be cookie cutter style, everything is kind of the same, three or four cars into the container and done.
I have been doing this for over 15 years now, and I have noticed that classic cars have a very unique clientele. At the same time, you become more knowledgeable and flexible when you work with new cars. It is much harder to get new car business, but once you have it, it is easier to operate. I think having this combination gives us an advantage in the market.
NSRN: In 2020, CFR transported 100 SUVs from China to Germany via the New Silk Road. This was a widely reported project. What motivated you to choose rail as the alternative for the transportation of these vehicles? How do you see the “Belt and Road Initiative” shaping the world of logistics and trade in the next decade?
Christoph: This SUV project is a great example because that particular business is controlled by the importer in Germany. Consider it as a German trading company, trying to establish that particular car brand in Europe. So, the way I understand it is that they bought these cars from the Chinese manufacturer as a first batch. After importing them to Europe, the goal was to get them to market and attempt to make them a regular model.
So for this German trading company, the New Silk Road rail option was considered in particular for its speed. There is a lot of money tied up in cars. If you are a car manufacturer and you have $10 million worth of product, and it takes you twice as long to get it to market, then that is a lot of dead money. Therefore, there is a need to get the car to market fast. For this case in particular, because the importer was a relatively small trading company with money tied up in these hundred cars, they needed a quick solution to get the cars to the market, that is Europe.
Of course, when it comes to regular ocean shipping, it is a lot cheaper but much slower. Therefore, the typical dynamic of the Silk Road is always the speed versus cost argument, and in this particular business speed is a huge advantage! All the big manufacturers, BMW, Volkswagen and so on, they like the rail option mostly for its speed, and not so much for the cost.
But there is a threshold, it cannot be too expensive. Right now, due to pandemic related congestion in ocean shipping, westbound rail transport – from China to Europe - on the Silk Road is even more in demand due to its fast transit times, even though container rates are even higher than pre-pandemic. Even the subsidies have reduced from the Chinese government because demand is so incredibly high. However, because container rates are quite high, winning new business in shipping cars westbound by rail transport is a bit more challenging at the moment. But going eastbound – from Europe to China – the rates are still reasonable because less FAK is moving east to west than west to east. So, we are seeing a lot of activity both in the existing containerized car business to China and new RFQs coming out from various car manufacturers, especially for electric vehicles. CFR is actively participating in various tenders. Using racking systems in containers and CFR’s long history and expertise in loading, unloading and freight forwarding are a big advantage in these tenders.
Having our own office and large warehouse in Bremerhaven, a major Silk Road hub in Europe, also helps us to be competitive. And our office in China, located strategically in Chongqing, another major Silk Road hub, is handling both Silk Road rail shipments and sea freight out of China for several car manufacturers. Therefore we feel confident that we are in a good position to handle Silk Road business from both ends.
NSRN: During the pandemic, what were some notable effects, considering many manufacturing units in China and worldwide had stopped production? How did you overcome these challenges? As we slowly enter the post-pandemic world, what are the future developments planned for CFR?
Christoph: There was a huge impact due to a hard stop (in production) for several months early in 2020. Basically, most car manufacturers had stopped operating and the plants had shut down. But remarkably it picked up very fast by around May, which meant that the slow-down lasted only a few months. Luckily, we still had the used car business going on in those months. Now business is back to normal and has been pretty consistent. The newer issue over the last 8-10 months or so has been the congestion, delays and equipment shortages at ports all over the world, with container rates going up and just a lot of chaos in the industry overall.
Essentially, we will continue in the same direction and strive to get more car manufacturer businesses. We are in a very niche market of shipping new cars in containers using racking systems, and the competition from Ro-Ro is always strong. Typically, Ro-Ro is quite competitive on high-volume lanes, for example between the US and Europe, or between China and the US. But we have gained so much knowledge over the past ten years using racking systems that we are able to identify those lanes where Ro-Ro is not as competitive and where using racks in containers to increase the utilization is the key competitive advantage. Also, we can operate globally with a really solid network of partners and agents that we have developed over the years and that are capable of handling racks.
We will continue to work on these tenders and new spot opportunities. We are getting some really interesting inquiries lately from traditional car manufacturers that are developing electric vehicles. They want to get these products to market fast, so there is a good opportunity coming now from traditional manufacturers with new developments. We also expect that the market for used cars in Southeast Asia will grow. It has been a really good learning experience and there is a huge future for our niche area of logistics.