Supply chain headaches will prompt industry-wide rethink

Coronavirus is shaking up global supply chains – and maritime industries will have to adapt quickly. 

The ongoing pandemic has completely adjusted the fabric of global commerce across swathes of industries. 

As we head into a potentially challenging winter in Europe and North America, executives are looking to make their organisations more agile and robust. 

Covid-19 brought the delicate nature of integrated supply chains to the fore, though.  

As the deadly virus spread in the Far East earlier this year, the widespread shutdown of production centres caused a major headache for Western businesses. 

A long-term rethink could now be on the cards. 

Labour in countries such as China might be more cost effective, but overheads pile up when longer supply chains go wrong. 

More localised – or at least shorter – supply chains look set to inevitably become more fashionable. 

The economics of offshoring aren’t as obvious as they once were either. 

Following a decade of eye-watering economic growth, Chinese pay packets have trebled. 

Average wages in the manufacturing sector are now fast catching up with Greece and Portugal. 

Uncertainty created by the 2008 economic crisis had already made outsourcing to low-wage economies moderately less compelling. 

Similarly, the UK’s decision to leave the European Union prompted more head scratching from logistics experts. 

Many businesses had already begun to invest in new supply chain assets in the UK.

So while the just-in-time supply chain might not be dead, a hard reboot looks nailed on. 

Suffice to say this could have huge consequences for a truly global industry like shipping. 

And to make matters worse, it’s not the only problem ship operators and charterers will be contending with. 

Difficulties with vessels changing crews is also a major concern as ports look to keep coronavirus at bay and could have a knock-on effect on supply chains if the issue is not resolved soon. 

Around 120 countries have implemented restrictions. 

A hefty 92, meanwhile, have prohibited crew changes all together. This means that seafarers, who under IMO regulations are prohibited from spending more than 12 months at sea, are unable to return home.

Suhail Bin Mohammed Al Mazrouei, who is a UAE cabinet member and minister of energy and infrastructure, told the International Maritime Virtual Summit that he’s putting his faith in innovation

“In the maritime sector, we are determined to lay a special focus on digital transformation and emerging technologies,” he said. 

We should continue to work together on addressing all challenges faced by seafarers by ensuring continuity of global maritime supply chains.

Big data and the sharing of information might become the crucial currency as we continue to wrestle with the supply-chain challenges of 2020

MarineTraffic Executive Partner Argyris Stasinakis explained back in June that his Athens-based technology company is already aiding collaboration and transparency across the industry. 

“At MarineTraffic, we’re from the AIS side,” he explained. “That’s considered essentially open in term of origin as it’s captured as emitted from the ships. 

“The work relates to turning the basic AIS information into a timeline. We capture all sorts of information about ships going into berth and leaving. 

There’s already lots of statistics and information that can be used for forecasting purposes. 

In the short term, all maritime businesses will have to live with coronavirus.

Plastics and chemicals distribution company Vinmar’s director of transportation, Alessandro Menezes, told Riviera’s Container Shipping Leaders webinar that some global shipping companies were simply looking at survival.

“The coronavirus pandemic has created devastation in global shipping demand and the entire freight transportation industry has been forced into survival mode,” he said.

One thing is for sure. With the foundations of global trade looking unsteady, only those that pivot will come out on top. 

New call-to-action