The Demand of Supply

It’s safe to say it has been an extraordinary eighteen months. A combination of Covid-19, Brexit, the Ever Given blocking the Suez Canal, and catastrophic flooding in Western Europe have caused immeasurable chaos to international trade, not least the bedrock of business — the global supply chain. In this blog we look at the perfect storm which the industry has faced and look to reassure customers that Energy Technology and Control have taken steps to ensure you can continue to buy with confidence.

A large cargo ship sailing down a canal, ready to supply goods

Covid-19 had a devastating impact on every aspect of the global supply chain, demand fluctuated as businesses reacted to knee-jerk legislation and consumer needs; factory output became chaotic, dictated by lockdowns, staff illness and quarantines; add to that the shipping backlogs and delays, with testing and restrictions disrupting EU road freight and the situation was fairly fraught.

Brexit may have been a little quieter than expected because of the understandable noise around the global pandemic, however its impact was far from subtle. A SAPIO Research survey undertaken earlier this year highlighted that a staggering 90% of businesses had experienced disruption after the Brexit transition period and that 76% had seen their planned Brexit response somewhat disrupted by Covid-19.

The EU-UK Trade and Cooperation Agreement, implemented upon the UK’s exit from the European Union, drove us into a shipping crisis. The footprint on the European supply chain was vast — the cost of empty freight containers increased at an alarming rate — from £1600 in November 2020 to £10,000 in December 2020. This dramatic rise placed a massive strain on construction supply chains, coupled with the delays caused by the imports of vast loads of PPE and non-essential retail stock in time for Christmas 2020. Sadly we aren’t out of the woods yet — shipping costs have yet to decrease to their pre-Brexit, pre-Covid-19 rate, with raw materials shortages and delays making them more in demand and keeping prices high.

While still attempting to mitigate the impact of a series of unfortunate events, a huge container ship ran aground on the Suez Canal, adding further complications to the transport of raw materials. Although the Ever Given disaster appeared to many to be a source of much mirth, the situation was another immense blow to industries, impacting supplies and, inevitably, the cost of materials and freight rates. The stranded ship held up approximately $9.6 billion of trade per day and was stuck for six days. German insurer Allianz crunched the numbers, stating that the blockage had the potential to reduce annual trade growth by between 0.2 and 0.4 percentage points, small numbers that carry big price tags.

And if a pandemic, a dramatic exit from an almost three-decade-old union and a stuck ship weren’t quite enough, July 2021 added extra disruption as severe flooding and violent storms hit Western Europe; the most serious adverse weather in decades. Some of the worst-affected areas included host industrial zones, operationally affecting manufacturing. Severe damage affected train-bound freight, and storms severely hit a key European cargo airport, again causing operational issues.

Whilst we can, with some conviction, state that the global pandemic is now at a manageable level, the Ever Given crisis is unlikely to happen again soon, businesses will navigate and manage Brexit in time, and storms will come and go, the impact of all these events will continue to be seen for some time, not least for businesses relying on global shipping chains to deliver raw materials. The focus for many businesses will be in absorbing the impact themselves, reducing the inconvenience and stress on customers. Energy Technology and Control has itself endeavored to do this by buying raw materials in advance and in bulk, ensuring that we have always raw materials available, allowing us to satisfy consumer demand and maintain customer confidence. To speak to a member of our team about how we can help your business achieve its goals get in touch.