Critical nature of the global supply chain

Many in export, import, distribution, and manufacturing will testify that there was already pressures on freight, with the cost of containers rising due to shortage and increasing demand from consumer and industrials alike. As the article points out, the container ship running aground in the Suez Canal could not have come at a worse time.

It also highlights the interconnected nature of all things trade-related, and how our daily lives are largely linked in some way shape or form to ‘Made in China’ consumer product or materials that form part of a wider manufacturing supply chain.

For years, the automotive industry has been operating lean ‘just-in-time’ models, where companies typically do not hold large quantities of stock and those they do are not on the shelf for long. As the Reuters article suggests, any resolution to the Suez blockage, is not going to resolve supply constraints any time soon. Air Freight is not necessarily the answer due to capacity, cost and for some goods/materials it just is not an option. Rail infrastructure connectivity with the east is also limited. 

Some of our clients have already been looking at how they can source some items from here in the UK. This may help in the short term but in the longer term may struggle to compete due to the cost of Asian goods/materials.

The recent dialogue between the EU commission and UK Government is a perfect example of why you must keep trade flowing. I never thought I would say this, but as Jean Claude Juncker quite rightly pointed out last week, any restrictions on vaccine export to the UK would be “stupid” – as, for example, the UK provides the raw materials for Pfizer from Yorkshire-based Croda International, who are in the process of quadrupling the size of their facility.

If extended working capital requirements are impacting your finances, we would be happy to help support you.

A stuck container vessel in the Suez Canal, which has blocked the flow of goods through the narrow channel, will add strain to global supply chains already stretched by rebounding economic activity and tight shipping container supplies

By Anusheh Khan on 29/03/2021