supply chain: companies are rethinking their supply chain networks after Covid

The pandemic has changed the nature of global supply chains, with companies seeking to source goods from multiple locations to minimize shipping and production disruptions.

Further evidence of the shift from a just-in-time to a just-in-case mentality, manufacturers are looking to add suppliers to more than one location to reduce their

on a single source, said Choi Na Young Hwan, head of the Korea Maritime Institute think tank’s international logistics analysis team. That could mean more warehouses will be needed, he said.

“The days of low transportation and logistics expenses are over,” Choi said in an interview Monday from Busan. “Companies will want to have more inventory in case something unexpected happens.”

Port operations around the world have been disrupted over the past two years, with containers piling up in terminals due to a lack of workers to reload them and truck drivers to take them anywhere. Shipping rates hit record highs in 2021 as Asian exporters scrambled to get goods to customers in the United States and Europe using the limited space available on ships.

Although China has been the global commodity factory for many years, more companies are looking for multiple solutions to minimize disruption, Choi said.

Disruptions will continue into next year as the global supply chain is so fragile after Covid that any event, big or small, will affect the flow of goods, Choi said. The end of a two-month lockdown in Shanghai, home to the world’s busiest container port, was expected to help improve congestion, but the problem has just shifted to Europe where ships are waiting longer to unload their cargo , did he declare.

Meanwhile, the war in Ukraine has caused Russian-linked containers to pile up in some ports in Europe, causing backlogs and disrupting the flow of boxes available to exporters in Asia, Choi said. German dockworkers went on strike earlier this month, adding to pressure on container yards at major ports.

The average container ship waiting time at the German port of Bremerhaven rose to 33 hours last week from 18 hours two weeks ago, according to shipping market intelligence provider VesselsValue Ltd. About 60% of ships traveling from Europe to Asia in April and May were delayed, and 13 ships were waiting for a berth in Rotterdam as of June 17, Kuehne + Nagel International AG said.

In the United States, labor negotiations between the International Longshore and Warehouse Union, which represents about 15,000 West Coast dockworkers, and the Pacific Maritime Association, made up of about 70 companies at 29 ports in the region, have started last month as workers’ contracts expire this summer. . In South Korea, truckers returned to work last week after a seven-day strike caused major production problems.

“Just when you think things are going to get better, something else unexpected happens to make things worse,” Choi said. “These things cannot be solved overnight. The longer the disturbances last, the longer it will take to resolve the problem.

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