The Impact of Global Events on the Supply Chain

It’s no secret that the global supply chain has been under severe strain since the pandemic hit. National lockdowns have slowed and in some cases put a halt to the flow of raw materials and finished goods, disrupting manufacturing and delaying deliveries. On top of this, the recent Suez Canal blockage has further disrupted supply chains around the world, perpetuating some of the challenges triggered by the pandemic. 

The Impact Of the Pandemic

When the pandemic erupted and the global economy started to shut down, supply chain vulnerabilities were quickly exposed. Numerous temporary trade restrictions and shortages of key products like medical equipment emerged. he UK and many other countries raced to quickly get as many PPE masks as possible. With the increased demand for PPE from healthcare systems across the world, and reduced supply available, the existing supply chain was stretched. To fill the void, businesses with the necessary equipment started to produce PPE and sold it to hospitals and individuals.

A supply chain impact study found that 85% of global supply chains suffered reduced operations during the pandemic. Despite this, supply chain executives are optimistic that a recovery will not be far away. Digital tools and data will be key in helping to create more resilience to uncertain supply and demand and supply chain disruptions.

Suez Canal Causes Further Setback

Just when experts were predicting that the economy was recovering and the supply chain was slowly growing stronger, a vital trading waterway was blocked for 6 days. Roughly 12% of global trade flows through the Suez Canal, translating to $9 billion worth of goods each day. The stranding of the Ever Given in the canal for almost a week, created huge backlogs as hundreds of ships were forced to wait for it to be freed. UK importers recently announced that shipments were delayed by up to 10 weeks. To make matters worse, the consequences of the recent logistics calamity go far deeper than delays in shipments.

Impact On Supply Chains

Delays in shipments have caused prices of delayed goods to increase sharply. For instance, due to delayed shipments of crude oil, companies that had oil were able to bump up their prices and profit from the backlog that competitors are suffering. Additionally, freight containers are in short supply and costs have skyrocketed – the cost of shipping from China to Europe has more than quadrupled, hitting a record high.

As a result of the Suez Canal incident, trading ports that were once world trade conduits are currently operating more like storage facilities. Trucks and railways responsible for moving goods to and from ports have become a bottleneck at ports. With port staff working tirelessly, these bottlenecks will eventually free up and affected supply chains will slowly start to recover.

Keep Stock Close To Your Marketplace

When storing your stock, you need to consider the distance between your warehouse and your primary marketplace. Holding your inventory in a different country to your marketplace complicates your supply chain and leaves you in a more vulnerable position when unprecedented global supply chain issues arise. Although the cost of storing your goods may be lower in a different country, shipping costs and import tax will quickly add up.

If your customers were based in the UK and your warehouse was in India, your supply chain would be convoluted and the order fulfilment process would take much longer. Whereas, if you ensure your stock is sourced from and stored in the same country as your marketplace, you won’t have to worry about import tax, shipping delays or disruptive events overseas. You’ll also be able to offer customers much faster delivery options because your warehouse is nearby.

Summary

The global pandemic has demonstrated that many companies simply do not comprehend the vulnerabilities of their supply chains in relation to unprecedented global shocks. To protect your business from catastrophe, you need to ensure your supply chain is as strong as it can be. At EC Group, we specialise in taking control of your logistics and protecting your business. We’ll manage everything from inventory management, to order fulfilment. Our logistics centre is well-positioned close to Tilbury, London Gateway and only 45 minutes from Central London, meaning you won’t be affected by disruptive issues taking place overseas. If you’d like to provide an uninterrupted service to your customers, partner with us and let us control your warehouse management and order fulfilment. 

If you’d like to strengthen your supply chain, please contact us.

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