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db Supply Chain Update: May 2023
Horst Mueller, global head of VinLog, powered by Kuehne+Nagel, reveals the pressing issues affecting global drinks supply chains today.
Demand and global volume low
“Whilst we have seen in part normalisation within the shipping market post the pandemic turbulence, coming into Q4 ‘22 and Q1 ‘23 inflation in many major economies and consumer markets has risen above 10%, thus impacting significantly on the cost of living. Geopolitical tension, energy and interest rates have ultimately fuelled consumer frustration, resulting in high inflation, interest rates rise, and reduced spending, especially for high-priced products. Thus, demand and global volume are low.”
Rise in labour disputes
“Within this sphere and directly associated to higher living costs, expectations of improved working conditions have remained a prominent feature with a rise in labour disputes leading to port disruption and port closures (e.g. ILWU US west coast negotiations).”
Capacity management measures as lower demand bites
“Due to the downward spike in consumer demand, carriers have started to implement capacity management measures working towards a balanced supply and demand principle. However, the widely expected sharp slowdown in demand has led to a normalisation of container freight rates.”
Capacity increase to continue in 2023
“As the carriers order book comes to fruition throughout 2023 onwards, this will further fuel additional vessel capacity within the market. Furthermore, the removal of congestion in the supply chain will increase effective capacity and bring the market back into an oversupply position. It is therefore expected that we will see an acceleration of mitigation measures by the carriers.”
Geopolitical and social unrest will continue to fuel volatility
“Current geopolitical tensions, fleet management by the carriers and labour disputes mean that volatility will continue to be a consideration for the coming months.”
Environmental regulations tighten
“Sustainability measures, for example using biofuel, continue to be an additional investment. Several actions and measures to minimise CO2 exposure via most sustainable routes to market are already available. Seaexplorer, Kuehne+Nagel’s platform for sea logistics service information in container shipping, helps customers to find the sea freight services with the lowest CO2e emissions. The need to drive The International Maritime Organisation (IMO) sustainability targets and the current European legislation (Fit for 55) will continue to gain momentum.”
Market intelligence
“In recognition of the market challenges, VinLog will deliver initiatives in accordance to the Roadmap 2026 set by Kuehne+Nagel. Namely a strong delivery of transportation data and market intelligence where our customers remain in control, understanding market dynamics and having the ability to factor in real time issues within their supply chain – whilst offering a multi matrix approach within supplier selection that ensures our customers’ products are delivered; even when market disruption remains constant.”
VinLog Powered by Kuehne+Nagel is a trustworthy logistics service provider that wineries, distillers and brewers, retailers, global importers and exporters can rely on, regardless of the service level needed, from the small, specialist family owned importer to the multi-national brand owner. With the backing of one of the world’s leading logistics providers, Kuehne+Nagel, we aim to become the most trusted beverage logistics provider, servicing customers all over the world.”