Michael Wax, CEO and Co-founder of $2.1 million-valued Forto, who provide digitized freight forwarding and supply chain solutions, told Trans.INFO that there would be a domino effect hitting Europe due to the aforementioned problems.
“The recent spike in Covid-19 cases in China – and the resulting congestion around its ports – will have a domino effect on supply chains around the world. But it will take time – 6 weeks or longer – for this shockwave to reach European markets,” said Wax.
The CEO added:
“The biggest problem for most businesses right now is not with international carriers, but a lack of production. Lockdowns mean labour isn’t available to keep factories running, or to move goods to China’s ports. Many suppliers currently have well-stocked warehouses in the EU, which will help to cushion the effect on consumers for the time being. But if these lockdowns continue, we may start to see reduced product availability in the coming months.”
Interestingly, Wax stresses that its air freight rather than sea freight that will be effected the most:
“The impact of this also depends on the primary mode of transportation used by a business. The bottleneck is not the ships: ports and shipping are, currently, generally functioning, whereas the air freight sector is seeing a larger volume of cancellations.”
The takeaway from all of this, according to the CEO, is to allocate more time to planning and recognise the importance of real-time insights and flexibility:
“To mitigate the impact of this, we’re advising customers to allow for greater shipping times and to invest more time in planning, if they have suppliers that are operational. Now more than ever, it remains important to be flexible and make the most of real-time insights to inform supply chain strategies.”