Global supply chain capacity has been drastically reduced through disruptions caused by the Covid-19 pandemic. The sudden shut down – and subsequent stop-start interruptions – has dramatically altered trade patterns, both in industry and transport logistics.
Delays of up to five weeks (on top of the usual six week wait) in the shipping and distribution of essential raw materials, goods and services halted operations in factories and businesses across the world, leading to production delays and shortages of everything, with analysts predicting that the trend could continue until at least March 2022.
Impact of global lockdowns
Strict lockdowns and restricted movement effectively ceased trade resulting in:
• Many producers having to shut down plants.
• Retailers scrambling to secure stock as consumers stockpiled essential goods from the safety of their homes.
• Flights and sea-freight services either being halted or reprioritised for medical supplies and repatriation, while demand for shopping goods and services dwindled.
• Unemployment skyrocketing as businesses buckled, decreasing disposable household income and expenditure along with it.
• Reduced operations and staff shortages, which saw increased port congestion or closures and reduced container availability leading to hikes in freight premiums.
Impact on the shipping industry
According to Drewry Shipping’s World Container Index (WCI), container prices are up 281% from a year ago, hitting $10 274.64 (R155 202) in August 2021. The $7 191 per 40ft container average composite index, assessed by Drewry for year-to-date, is $4 661 higher than the 5-year average of $2 530.
Despite the fact that the number of container ships has increased by around 10% in the past 10 years, the container throughput increased far more by 39.2% – nearly four times the rate of new ships. Port hours, however, have not increased much and the number of cranes by only about 7% making for an obvious bottleneck in transport logistics.
To add fuel to the fire, our local harbours were ranked among the world’s worst out of 351 ports by the World Bank’s Container Port Performance Index 2020.
Rethinking critical supply chain shortages
The challenges of the supply chain network forces production managers to rethink procurement policies and project timelines. According to Denys Hobson, logistics and pricing analyst for Investec Business, longer lead times and increasing rates need to be factored into business planning.
The only other possible solution is to shorten the supply chain through localisation drives such as #Specify SA, to avoid lengthy project delays by sourcing local.
FloorworX is the only South African vinyl flooring manufacturer that produces vinyl composite tiles (VCT) and sheeting at its factory in East London. Using readily available limestone as their raw material instead of chalk, there are no import delays or exorbitant freight charges to produce their world-class flooring ranges.
Stockholding and turnaround times
Their warehoused stockholding and 24-hour turnaround time to any major city centre through their partnership with Triton Express, ensures on-time delivery on site. Lead times for production planning for major projects in excess of 10 000 squares are limited to two weeks compared to the 6-10 weeks on imports, with no port delays and infinitely lower transport costs. In addition, buying local reduces the risk of material loss or damage (at sea or in storage) whilst also creating much-needed employment.
The benefits of buying local are obvious. Who wouldn’t want to do that? #Specify SA can help everyone get back to normal business.
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