The pandemic of 2020 saw the concoction of the perfect storm of events wreaking havoc on businesses and supply chains across the world. We all know that South African companies were not spared from the ravages of the pandemic.
During the lockdown level 5, thousands of containers were stuck in container depots around the country incurring hundreds of millions of rands of storage and demurrage. Travel bans resulted in the cancellation of passenger flights with the consequential spike in airfreight costs. Borders were closed for weeks and upon opening, serious delays were experienced as a result of Sars-Covid-19 protocols and positive cases among border police. Instances of virus outbreaks among shipping crew resulted in entire vessels being quarantined. This, coupled with the general change in patterns of demand and supply, resulted in imbalances in the global sea freight market.
These all led to debates about de-risking the supply chain by looking at sources of production closer to home.
For South Africa, localising manufacture has the added potential of creating much-needed jobs.
Unfortunately, South Africa’s manufacturing sector is poorly developed when compared to the USA and Europe. We lack the economies of scale to realistically be able to produce all types of goods at prices that can compete with the global production giants. To make matters worse, the South African manufacturing environment has developed a reputation for not being competitive, and local production is widely accepted as having its own inherent hazards – industrial action and wage-based inflationary pressures to name just two.
The net result is that despite the escalating risks of global supply chains, it is unlikely that we will see a major shift of production to South African shores. If this is true, then now more than ever the need exists for importers to find a logistics provider they can partner with. One that has insights into global trends and can react quickly to offer creative and cost-effective solutions for the challenges that are thrown at businesses.
Global supply chain risks aren’t going away – we can only do our best to manage them better.