As per a global forwarding company, Covid-19 has created shorter supply chains and a trend towards sea-air cargo. In a new report, the forwarder mentioned the pace of change in logistics over the past two years has been bigger than in the last 20 years. Resilience is the most important factor in supply chain planning.
For certain industries global supply chains will remain relevant, however, small businesses, will adopt shorter, regionally diversified supply chains to enhance their resilience to disruptions such as the pandemic.
There could be rise of new modes of transport due to cost control, besides established air and sea links.
Though bottlenecks in sea and air freight remain prevalent, more clients seem to be receptive to change and embracing hybrid solutions and modes that were less acceptable before pandemic struck.
Many businesses have opted for rail and road freight to deliver goods between regions such as Asia and Europe. However for the near to medium term, we are expecting to see sea and air both as the best intermediate alternative product, in terms of cost-effectiveness, carbon footprint and overall availability.
Several companies are shifting manufacturing to India, Thailand, Malaysia and Vietnam, the main beneficiaries of a ‘China-plus-one’ sourcing set-up.
Several firms are looking for low cost countries with stable supply chains, as labour cost advantages start to vanish in China, besides the risk of US-China trade wars remains.
The pandemic highlighted the fragility of supply chains globally. Artificial intelligence and cloud computing were able to still empower businesses with greater visibility. Which means optimization of routing based on traffic conditions, just-in-time arrival of vehicles and ships plus freight contracting, including vessel sharing, which potentially reduces time wastage, and also delivering fuel and cost savings.
Supply chain technologies are expanding across main Asian economies. Investment is required by firms to allow cross-operations with these digital platforms.
Companies need to keep up with the pace to avoid technical barriers in sustaining business and trade.