energy

Energy crisis: New global risk causes disruption in 2023

by Supply Chain Resilience News

According to an economist, as the world struggles with rising fuel prices, supply disruptions, inflation, and the impact of Russia’s invasion of Ukraine, the energy crisis enters the top 10 global risks for the first time at #4 in its Risk Barometer.

The invasion of Ukraine by Russia, the largest exporter of fossil fuels in the world, in February 2022 further destabilized the international energy market. Following the drought, hydropower capacity was affected throughout much of Europe. In France, more than half of the nuclear reactors were shut down for maintenance or due to technical difficulties.

The timing of the current energy crisis is the only aspect that is not negative. Europe and other places are about to undergo a green transformation.

Therefore, businesses must decide whether to proceed toward the electrification of production processes and the hydrogen economy, which will require prudent investment, or rely on energy-cheap foreign countries.

While the energy crisis may eventually help the economy decarbonize, it may also make climate policy less popular due to the rise in energy poverty unless effective and lasting aid measures can be implemented.

According to an economist, a new social contract is required to solve the long-term issues posed by the increased energy prices expected to occur throughout the green transformation.

What can businesses do?

Identify critical business processes that a gas or electricity shortage may impact, either directly or indirectly.

Consider how long it will take to resume operations properly and how this may affect employees, customers, or suppliers.

Outline the measures that can be taken to ensure that your critical business processes are resilient to gas or energy shortages. Test your business continuity management plan with a power outage-based scenario.

It is essential to regularly review the business continuity management process if the regulatory, political, or energy market situation changes.

The energy crisis has also demonstrated that decarbonizing the economy is a need rather than an option. According to Allianz, this necessitates billions in investments in new technology and a comprehensive redesign of corporate reporting, ensuring compliance issues continue to rank among the top five risks.

According to the theory that these factors are precisely what eventually become financially significant, this puts non-financial issues at the forefront of reporting.

Last but not least, extending the reporting scope beyond the existing emphasis on financial risks discloses information a considerably more complicated exercise since the CSRD adopts a double materiality approach, and it necessitates evaluating both impact directions.

The impact materiality focuses on an asset’s environmental and social impacts from the inside-out perspective. In contrast, financial materiality is focused on the effect of environmental, social, and governance (ESG) issues on the financial performance of assets from the outside-in perspective.

port (2)

Hải Phòng Aims To Become An International Logistics Centre

by with No Comment

Due to its many advantages as a transportation center for all five types of traffic, including sea, road, air, railway, and inland waterways, Hải Phòng aims to become a regional and worldwide logistics hub.

This goal is emphasized for the northern city’s 2030 service sector development strategy, including a long-term vision for 2045 that includes logistical services.

The city is also exploring ways to establish a free trade zone, which is considered a breakthrough to take full advantage of Hải Phòng’s logistical advantages.

The Politburo’s Resolution 45 on building and development of Hải Phòng City by 2030, with a vision to 2045, also states that Hải Phòng will be transformed into a national logistics service hub by 2025.

It will develop into a modern international logistics service hub by 2030, with high-speed rail, high-speed air, and sea access.

To develop logistics services, the government would support administrative reform and digital transformation in the seaports and logistics sectors.

It will enhance trade promotion and investment attractiveness and create logistical service chains with significant added value and regional ties.

According to the Ministry of Industry and Trade, Hải Phòng enjoys significant advantages in terms of the infrastructure of its seaports, fishing ports, industrial production warehouses, and products import and export operations.

Several of the 14 industrial parks are being constructed simultaneously based on logistics services to improve connectivity between businesses at supply chains.

In the past, Hải Phòng focused on enhancing and investing in seaport infrastructure in accordance with the growing trend of local and international shipping. It has a better, more synchronized transport system.

Numerous projects for developing logistics centers in industrial and economic zones (EZs) have also been granted investment licenses. Examples include a VN$34.8 billion logistics center financed by the Cargo Services firm and a US$35 million logistics project. These have given the logistics service sector in Hải Phòng new opportunities.

Traditional and advantageous service industries, including shipping and logistics, have experienced significant growth in 2022. They have actively contributed to the socioeconomic growth of Hải Phòng and the northern critical economic zone.

The growth rate of the logistics services industry in Hải Phòng is roughly 20–23% annually, and this industry has contributed 13–15% to the city’s gross domestic product (GRDP).

Strong growth in the number of commodities passing through the city’s ports has contributed to a large market share in the nation’s seaport system.

A member of the Hải Phòng City People’s Committee highlighted the service’s flaws, stating that while the city has over 1,000 businesses registered to offer logistical services, they are not very competitive and have a low market share.

The transportation infrastructure is under a lot of strain as the majority of cargo volume through the Hải Phòng seaports is still transported by road.

The ability to transport products via rail and inland waterways still needs to be improved.

Another issue is the lack of labor, exceptionally skilled labor. The Hải Phòng logistics and production industries are always facing a severe staffing shortage, particularly in logistics sales, logistics information technology, and staff coordinating transportation and warehousing operations.

On the other hand, most business employees need more logistics expertise, which will be a significant obstacle to the service’s future development.

According to forecasts, Hải Phòng will require around 369,000 logistics workers, including 252,600 skilled workers. This number will rise to 460,000 workers by 2030.

For many years in the future, there will still be a shortage of quality and quantity of human resources for the logistics industry in Vietnam in general and Hải Phòng in particular. Currently, approximately 40 to 45 percent of the sector’s demands are being met by human resources.

Therefore, Hải Phòng has to have a plan for the sustainable development of human resources for the logistics industry.

thef

Food and Fuel Top Global Cargo Thefts

by with No Comment

As a proportion of cargo theft, hijacking thefts have decreased and are now second only to theft from facilities.

According to statistics from a supply chain business, food, and beverages are the commodities that are stolen the most globally, with theft rates rising by 2.8%.

The industries most impacted included agriculture, oil and gas, and automotive.

The report showed that thefts by hijacking have decreased from 24.4% of cargo theft to 17%.

These are now second to theft from facilities, which has climbed from 24.2% to 26%, accounting for more than a quarter of total thefts.

While thefts from electronics, agriculture, and construction have decreased, thefts from automotive and fuel are on the rise.

Although cargo theft overall has decreased due to hijacking, the supply chain business observed that this significantly impacts global supply chains, particularly those for food, pharmaceuticals, and construction materials.

Carrier fraud on the rise

The transport and logistics insurance business research sees criminal fraud as a major and growing threat within the global supply chain.

Due to the almost exclusive use of online facilities for processing business transactions, a wide range of fraudulent activities can take advantage of the supply chain’s complexity.

84% of transport and logistics insurance company claims involved carrier fraud, in which criminals pose as haulers and other subcontractors, including drivers with forged documentation.

No one should underestimate how profitable an industry fraud is, including freight forwarders, shippers, carriers, container owners and logistics, ports, warehouses, and depot operators.

Fraudsters can easily steal significant sums of money or consignments of cargo using sophisticated, low-risk strategies, according to the managing director of a transport and logistics insurance company.

In most cases, sophisticated organized crime gangs, not opportunistic individuals acting alone, are responsible for the fraud incidents that target global supply chains.

As seen by the recent disruption to the freight transport system, they have well-honed tactics that are adaptive in the face of detecting devices and changes in operating procedures. We must raise our level of awareness and readiness to protect our businesses.

AI

Artificial Intelligence in Logistics

by with No Comment Supply Chain Resilience News

The pandemic has required a higher use of technology across many industries. Nowadays, Artificial intelligence is used in every industry, including logistics. Below, we will discuss how artificial intelligence will be used in the logistics sector and how that will help it grow. AI applications in the logistics sector are primarily intended to reduce time-consuming actions and costs.

Demand Prediction

In logistics firms, there is a lot of coordination and planning done between suppliers, customers, and other departments. With AI, we can utilize real-time data, improving demand prediction accuracy. It will help manufacturers optimize the number of vehicles dispatched and save operational costs. Local retailers and warehouses can also lower the cost of holdings.

Optimization of Sales and Marketing

For sales and marketing, AI offers diverse aspects. Examples include analyzing consumer behavior and using predictive analytics to have a better understanding of what a customer is most likely to do next. Because they can monitor market developments closely, freight forwarders benefit from AI’s ability to stay ahead of the competition and make informed choices.

Real-time Decision Making

Finding the best carriers and transporters and optimizing routes at a competitive cost takes a lot of time and effort. However, with the help of AI, freight forwarders can instantly utilize thousands of datasets for recommending the carrier and route that is most cost-effective.

Automated Offices

Document automation technologies can be an excellent way to handle documents by automating data entry, error reconciliation, and document processing to maximize document processing efficiency. With these technologies, businesses may automate several back-office functions, including scheduling, tracking, report generation, email processing, and other office tasks.

A Better Customer Experience

Using big data from AI, freight forwarders may gain a better knowledge of their customer’s behavior, preferences, interests, timing, etc… A faster shipment process and reduced costs can be achieved by minimizing human errors.

The logistics and freight sector will be able to utilize AI-based technology effectively if freight forwarders rise to the challenge and successfully apply it.

cargos

Nearshoring trends on rise in Asia – Pacific

by with No Comment

Companies were relocating manufacturing closer to home to protect against supply chain disruptions, while more protectionist policies were dividing the world into trade blocs, according to an Economist Impact.

More than half of business leaders in Asia-Pacific (APAC) and Australasia who were surveyed said they intended to diversify their supplier base, and a third plan to switch to suppliers within their home market (14%) or region (19%).

The survey revealed that geopolitical uncertainty also influences business leaders’ actions, with 97% of APAC-based firms and 96% globally intending to change their supply chains due to global events.

A third of the 3,000 global executives surveyed were from the APAC and Australasia areas, primarily from Australia, China, India, Indonesia, Japan, the Philippines, and South Korea.

Compared to 2021, the number of firms in APAC and globally moving their manufacturing and suppliers to neighboring or domestic markets has more than doubled in a year. The statement stated that this is driven primarily by efforts to lower costs and the risk of disruption.

Some 51% of APAC executives reported that 51% of their suppliers were being diversified and that 29% were decreasing their supply chains due to geopolitical issues. To protect against uncertainty, one-third of companies in the area intend to expand into more stable and open markets.

A quarter of APAC firms were concerned about rising inflation, which they anticipated would cause global exports to shrink by 1% due to decreasing production and demand. Transportation, high energy, shipping capacity limitations, and supply shortages were all considered inflationary forces.

According to the survey, 32% in Asia-Pacific, 40% in South America, 36% in the Middle East, and 18% in Africa outsource within their regions.

Global geopolitical developments will continue to provide a significant challenge to the trade picture in the Asia-Pacific, in addition to growing inflationary concerns. Companies, however, are not avoiding risk; instead, they respond in two key ways. The first is expanding into new, reliable markets, and the second is increasing supply chain due diligence, according to a leading logistic company in the Asia Pacific and Australia.

India highway

Why Budget 2023 Should Focus On India Logistics Sector

by with No Comment Supply Chain Resilience News

The logistics industry in India has seen significant instability over the last three years and new challenges as the country recover from the epidemic. Stakeholders cite the workforce as one of the major ones now.

According to the co-founder of a logistics firm, the industry is facing driver shortages for deliveries. During the festive season, when the traffic load was high, it caused many more problems. A courier aggregation service claims that logistics companies struggled to reach the expected delivery time, which resulted in dissatisfied consumers.

A co-founder of a logistics firm claims that the industry is the most disorganized and fragmented in the country. It needs to be streamlined to increase the effectiveness and efficiency of the operations.

According to a logistics provider, there is an increase in the demand for shipments. However, this industry has several issues with employment opportunities and driver retention. Truck drivers, forklift operators, skilled workers for warehouses, and other positions are critically needed in the country’s logistics industry to keep up with the demands of a growing economy.

With the budget coming soon, the stakeholders claim the government has an opportunity to address these and other problems affecting the logistics industry, which is the foundation of trade and commerce.

Additionally, some experts compare the recent claims of unemployment with the need for better workforce management in logistics. There is an opportunity for gainful employment here, and the budget may outline the several routes necessary to hire, train, and retain staff to benefit the industry in the long run. However, the challenges are making jobs in the logistics sector attractive and encouraging individuals to consider it a career option.

According to a logistics provider, rising fuel prices are another challenge hurting the logistics sector. The road is India’s most common mode of transportation, mainly because overcrowded rail networks, multiple handling, and high rail tariffs make it difficult to use those services.

However, due to recent volatility in fuel prices, transportation costs have significantly increased, putting logistics firms under a lot of pressure. He also brings attention to the inadequate conditions and restricted locations of warehouses.

According to him, building a sizeable integrated warehousing space is challenging because of the need for a qualified workforce, high warehouse rent, and higher interest rates. He also notes that there is a need to streamline the processes at various stages in the industry.

According to experts, India’s logistics costs as a percent of GDP are high, and lowering them can significantly boost the sector’s operations, employment, and growth.
According to the government, by 2024, the logistics cost percent to GDP, which represents the cost of transporting goods, should decrease from around 16% to around 10%, making it more competitive with developed or similar countries.

The logistic provider is cited that in the upcoming budget, the government may address crucial concerns, including rising rental rates, fuel, and transportation expenses, fragmented communication, and infrastructure expenditures which have significantly increased the logistics service’s operational costs.

There should be an incentive-based structure in place. For instance, people who construct warehouses can get rewarded, and the tenant should be able to rent the space for considerably less per square foot. The government should consider giving incentives to businesses that invest in automation and warehouses that use such technology.

Any sector stakeholder is aware of the need to use more technology. It equips most companies to compete with any major player on the global stage. However, the high fees are only affordable for some companies.

According to the logistics provider, the budget might boost logistics automation costs, encouraging even smaller firms to adopt new technology. Focused investing in advanced technology is urgently required, according to a logistics company expert.

We can foresee that the budget for 2023 will strongly emphasize improving India’s logistics ecosystem by utilizing data-driven technologies to make it even more technologically advanced, integrated, affordable, and reliable. As there is a severe shortage of skilled workers and professionals in this industry, the logistic company expert also emphasizes improving human resource skill sets.

We need to support R&D and innovation by establishing training institutions that can teach students about advanced technology. The sector also has to encourage equal employment opportunities for women and people of the third gender, cited the logistics company expert.

A logistics provider suggests that the budget should consider investing in more multi-modal logistics parks. She adds that we anticipate an investment in port infrastructure this year to address logistical inefficiencies and that the industry’s efficiency will be the main focus.

Industry leaders eagerly await the National Logistics Policy’s implementation to streamline operations and lower logistics costs.