Unlock the potential of nearshoring with our versatile solutions that cater to a wide range of industries and commodities. Our approach facilitates a seamless transition to alternative markets, ensuring a gradual and effective conversion for your business success.
What does the crisis in the red sea mean for supply chains?
The Houthi attacks on vessels in the Red Sea are forcing shipping companies to switch to routes around Africa instead of the Suez Canal. With considerable consequences for supply chains – freight prices are exploding, lead times are significantly longer and CO2 emissions are increasing.
What can companies do now and how can they protect themselves against supply bottlenecks and rising freight prices in the long term?
Longer transit times and additional surcharges
increase in fuel consumption for re-routing
more days of transport time from Asia to Europe
price increase by operational costs
Mitigating bottlenecks: advocating close monitoring and strengthening supply chain resilience
Monitoring of situation & assessing of surcharges
- Evaluate if your routes are affected by the requested re-routing
- Create clarity about surcharges and justify these
- Recognize that due to force majeure, surcharges can be re-negotiated only after 3 weeks
Consideration of different transport modes
- Assess alternative modes like air freight to prevent delays from vessel re-routing
- Monitor price increases for air freight shipments
- Evaluate freight costs against lead time improvement
Preparation of tendering in the future
- Secure contracted rates and include indexation in new contracts
- Pro-long shortly expiring contracts, while simultaneously evaluating cost-effective alternatives on the spot market
- Prepare RfQ to be ready to go to the market in the future
Evaluation of alternative sourcing regions
- Assess your category portfolio to pinpoint commodities suitable for nearshoring
- Prioritize re-/nearshoring to boost supply chain resilience, reduce CO2-emission and lower product price