Author’s Note: I was asked by Transporeon (a Talking Logistics sponsor) to look at what is happening in the European transportation market and they provided me with access to their Transporeon Insights market data for additional insights and perspective. I once again shared my commentary for this month in a brief Transporeon Journal video commentary. Below are my introductory remarks. I encourage you to watch the full commentary for more details on what is happening in the European transportation market.
“We close our eyes and the world has turned around again.”
That’s a song lyric from one of my favorite bands, Oingo Boingo, and I find myself singing those words whenever I stop to think about the world of supply chain and logistics.
Just when you think you have it all figured out, the world turns around again, layering new challenges (and opportunities) on top of existing ones.
Here we are almost a quarter of the way through 2022. It’s been two years since the start of the COVID-19 pandemic, and while we’re in a better place today than we were two years ago, we’re still dealing with outbreaks around the world, the most recent one fueled by the Omicron variant.
And we’re also still dealing with production shutdowns, port congestion, supply shortages (especially with semiconductors), capacity constraints, labor shortages, and other challenges caused (or made worse) by the pandemic.
If all this wasn’t enough, we close our eyes and the world has turned around again, and we now find ourselves witnessing a war between Russia and Ukraine.
It is a sad development, with all the tragedies that come with war: death, destruction, and people fleeing their homes to neighboring countries for safety.
Needless to say, there is a lot of uncertainty at the moment, including how this conflict will impact supply chains in the days and weeks ahead.
According to data collected and analyzed by Interos, more than 2,100 U.S.-based firms and 1,200 European firms have at least one Tier-1 supplier in Russia, and more than 450 firms in the U.S. and 200 in Europe have Tier-1 suppliers in Ukraine.
Looking further upstream into supply chains, more than 15,000 firms in the U.S. and 8,200 European firms have Tier-2 suppliers based in Ukraine, and more than 190,000 firms in the U.S. and 109,000 firms in Europe have Russian or Ukrainian suppliers at Tier 3.
Software and IT services, automotive, agricultural products, industrial machinery, oil, gas, steel, and metal products are among the industries affected.
Of course, transportation networks and services are also getting disrupted. As of this recording, for example, Maersk, FedEx, UPS, and several other logistics firms and port operators have suspended operations in Ukraine and Russia. The longer this conflict goes, the more disruptions will occur.
Dealing with Uncertainty
So, what now? How do you deal with all this uncertainty?
Staying informed of what’s happening — with sanctions, border crossings, transportation service disruptions, your Tier 1, 2, and 3 suppliers in the region, and so on — is the first step.
Transporeon, for example, has launched an information hub on its website that provides the news and updates on how this crisis is impacting global shipping and ocean, air, and road transportation. And this is another example of where having real-time visibility to supply and demand is especially important.
Doing something with this information is the next step. For supply chain professionals, this means using this information to model and simulate a variety of different “What if?” scenarios — What if, for example, there is a widespread cyber attack that emerges from this conflict — and developing response plans for each one. Simply put, when dealing with uncertainty, you have to prepare for multiple outcomes.
The third step may be the most difficult: letting go of “the way we’ve always done things” when all of the evidence suggests there’s a better way forward. This includes letting go of outdated (often manual) processes, outdated technologies, and outdated ways of establishing and managing business relationships.
This Russian invasion of Ukraine is compounding a variety of other issues the world was already facing, including record inflation.
For more on inflation plus additional insights, data, and advice related to the European transportation market, please watch the full Transporeon Journal commentary.
