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TREASURY

Onshoring will not solve supply chain disruption for corporates

The World Trade Organization has suggested that the worst of the global supply chain crisis is over, but that will be of little comfort to corporates facing continued uncertainty and extra costs.

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The WTO’s latest Goods Trade Barometer, published in mid-November, makes for sobering reading. It notes that demand for traded goods is easing – illustrated by falling export orders – and that although cooling import demand could help ease port congestion, backlogs and delays are unlikely to be eliminated as long as container throughput remains at or near record levels.

Some of these problems are structural, particularly the amount of time it takes to unload cargo ships. IHS shipping experts Daniel Yergin and Peter Tirschwell refer to a “supply chain mess” that at one point saw around $8 billion of cargo anchored off Los Angeles and Long Beach because no berths were available. Similar issues have been reported at other major ports around the world.

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Ed Dwan, BDO
Photo: Jay Cain

The reasons for these delays include inadequate distribution centre capacity and shortages of warehouse workers and truck drivers, familiar issues for UK businesses in particular. “The shortage of truck drivers has driven UK transportation companies to increase costs by approximately 20%,” points out Stephane Crosnier, Accenture's supply chain and operations lead in the UK.

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