Inflation and changing global economic and energy outlooks are shaping European supply chains like never before, a Reuters Events Supply Chain and JLL White paper reveals.
Of the megatrends reported in the research, the main one highlighted for Europe, the Middle East, and Africa (EMEA) supply chains in 2023 is the fallout from the Ukrainian War, which is causing inflationary and disruptive effects.
Next up is inflation, which is leading organisations to invest in more efficient core operations and reduce energy intensity along supply chains. There is hesitation to scale down operations and draw down inventories due to uncertainty.
Inflationary pressures are expected to persist, the research states, but relief is expected in the second half due to weakening global demand, cheaper shipping, and a less frenetic market for industrial space.
JLL and Reuters surveyed 170 EMEA supply chain managers in the research which found:
- 68% expect the war in Ukraine to disrupt supply chains in 2023 – the most widespread concern in EMEA
- supply issues increasing energy/fuel costs (66%) and the effect that inflation will have on consumers (55%).
- Other inflationary pressures reported include labour shortages (54%), input material
inflation (36%), instability among suppliers as a result of battling rising prices (31%)
The research warned “Inflationary pressure working its way through supply chains is not over,” but might be softening.
- 81% of professionals working for Logistics Service Providers (LSPs), manufacturers or retailers in the survey said that they will need to pass on costs to customers this year
- 15% said that they expect substantial costs to be added on, suggesting that the inflation peak may have passed.
- Port capacity and covid restraint concerns have lessened with 18% expecting such related issues.
Shipping primed as ‘a buyers’ market’
With shipping, there’s a consensus about oversupply – “putting it firmly into a buyers’
market in 2023,” the research says.
“Fifty-eight percent believe there will be overcapacity in the shipping market, compared to 35% who see a lack of container space. Twice as many see severe or moderate overcapacity than under,” it said.
Investment in tech to understand supply chain behaviour
Supply chain technology in 2023 zeroes in on understanding and predicting supply
The top supply chain technologies for investment include:
- Supply chain monitoring, tracking and visibility solutions – 68%.
- Forecasting – 48%.
- Process automation – 47%.
- Facility automation and robotics – 37%.
- Analytics – 37%