Senior freight and shipping executives at the Multimodal 2022 exhibition and conference event say wariness of pre-Covid just-in-time models will persist until shippers regain confidence in the reliability and resilience of global ocean freight transport systems

 

By Will Waters

The switch to just-in-case (JIC) supply chains from pre-Covid just-in-time (JIT) models looks set to stay until shippers regain confidence in the reliability and resilience of global ocean freight transport systems, according to senior freight and shipping executives at Multimodal 2022.

In a panel discussion today on ‘Integrated Logistics’ at the UK exhibition and conference event, HMM Europe managing director for Great Britain, Peter Livey, highlighted that there have been so many ‘black swan’ events in the last few years that some previously dominant supply chains models such as ‘Lean JIT’ were no longer seen as reliable. He said many companies have had to adjust or re-examine their models because of the extensive disruptions due to Covid and port congestion, with significant implications such as the location of stock. But he questioned whether the associated higher levels of inventory would still be needed in two or three years’ time.

Nick Winder, group managing director for WIN Logistics Group, commented: “If you look at warehouse occupancy rates, customers are holding a lot of product locally,” because of fears over what will happen in the event of another disruptive event. “I don’t see that changing until there is more resilience”, to the extent it offers customers the reassurance that their supply needs can be met reliably by the logistics system.

Samantha Brocklehurst, customer experience director for the UK & Ireland at Maersk, said: “I think people have been burnt in the last two years,” by the disruptions to logistics supply chains. “We have seen a swing to the opposite,” from JIT to JIC. “I think we will see that rebalance. I don’t think we can go back to JIT, but I think there is a middle ground.”

The panellists questioned the idea that customers will significantly reverse two decades of outsourcing manufacturing production to China and the Far East – near-shoring production closer to consumer markets – because it was a complex and expensive change to make. More commonly, customers are instead looking at moving some production to other Asian countries, said Livey.

And partnership with a global integrated logistics provider may help to ease that transition, Winder said.