4 major issues that will continue to impact supply chains
Two of the most common utterances from the past two and a half years would have to be “supply delays” and “unprecedented.”
“Supply chain managers need to think carefully about opportunities and risk when looking for new sources while considering how to coordinate the change from one source or mode to another,” said Joachim Arts, a CTL research affiliate and associate professor at the Luxembourg Center for Logistics and Supply Chain Management.
Recent feedback from Toyota in Australia says its current waiting times are ranging from six months to two years for popular models.
Global issues that continue to impact supply chains serve to highlight the value of Australian manufacturing.
Wilson & Gilkes has been working with several companies in Australia to create supply certainty of sheet metal fabricated products and components.
Here are four of the major issues that will continue to impact supply chains:
- Covid Lockdowns in China
China’s Covid Zero policy to be maintained until at least 2023.
Lockdowns and other mitigation measures have intensified, including in Chengdu, the country’s sixth-largest city with 21 million people, and parts of Guiyang, home to China’s biggest residential compound where some 400,000 people live in 300 buildings. Meanwhile, Beijing is tightening travel restrictions for anyone entering or leaving the capital.
China’s National Health Commission recently announced a raft of measures that will be in place until the end of next month to fight a virus that shows little sign of slowing. Authorities told citizens to minimise travel during the mid-autumn festival next week and National Day holidays in October – ordinarily key periods for domestic tourism – and asked local governments to test all residents regularly for Covid regardless of infection levels.
- Ukraine Conflict
The Russia-Ukraine war is having an outsized impact on the global supply chain, impeding the flow of goods, fuelling dramatic cost increases and product shortages, and creating catastrophic food shortages around the world, according to Transport and Logistics experts.
- Increased Cost of Sea Freight
Shipping prices are currently more than four times higher than they were before the start of the pandemic.
A 40ft container now costs just under $8000, with prices expected to increase in coming weeks to about $10,000.
In contrast, rates were below $2000 at the start of 2020.
There is a strong possibility that these higher rates will become permanent.
- Reliability of Shipping Arrival Dates
There has never been a time when sea freight carriers have been more unreliable.
Reliability is measured by the actual arrival date of vessels against the advertised arrival date. In January 2022, reliability dropped to a low of 30% and rose only slightly to 35% the following month.
In contrast, carriers were recording 70%-80% reliability in pre-Covid 2019, with less than five days of delays.
Using Australian suppliers will reduce supply risks.
Wilson & Gilkes designs and manufactures 100% in Australia. No supply chain risk. Contact us on (+61) 2 9914 0900 or sales@gilkon.com.au
