With increasing dangers in the Red Sea, commercial vessel owners have been forced to change course and are now delivering an unavoidable “slow boat from China” option for shippers and importers alike. Vessels are being forced to travel around Africa, and journey times to/from Asia have had to increase by up to 14 days. Increased fuel costs will need to be passed on too.
Most commentators agree that the current level of financial stress in the economy is great, with local cost pressure from pay demands and lower productivity, so the re-emergence of such geo-political unease and disruption is likely to harm further. In many sectors of the economy there is over capacity and downward pricing pressure is likely. In the short to mid-term, many businesses may be supporting falling prices against a backdrop of rising supply chain costs and concerns over security of supply. Some businesses will survive and ride it out, others may not and fail.
The challenge for all businesses with a trans-continental supply chain is particularly acute as they will have to map a course that best tackles these difficulties in a way that can deliver the greatest future benefit. Increasing lead times and costs, coupled with further inflationary pricing because of worsened container availability will be a challenge; just when businesses thought things might be getting a little better. Of particular concern, is that it is far from clear how long the disruption will last and whether it could get worse. The geography of the region means that it is relatively low cost to launch drones that can result in either a significant cost to stop them or a significant cost to shipping if they succeed in overcoming defences. It only takes the occasional hit to persuade the majority of shipping lines to avoid the area.
Companies are now having to consider how to deal with a problem the timing of which is uncertain.
Davies & Robson, with extensive experience in infrastructure and supply chain planning can provide the following assistance:
- Determining optimum stockholding levels to deal with longer lead times
- Considering impact of alternative supply points or shipping methods
- Determining best way to facilitate temporary increased stockholding
- Reevaluating the global supply chain infrastructure in order to achieve greater resilience against different scenarios in a rapidly changing World
- Assisting in the evaluation of long-term strategic solutions including on shoring and near shoring
When considering future operating and commercial strategies the value of the support offered by an informed, independent expert can be significant. They can play the lead in helping to define the strategic process as well as guiding the transfer of strategic intent into meaningful deliverables and actions.
Davies & Robson have significant expertise in helping companies determine short term solutions or developing long term strategies and then designing and implementing plans to meet changing requirements. For an informal discussion on how we can help your business with future infrastructure planning, give Davies & Robson a call on 01327 349090.
