New opportunities in the era of disruptions

Capacity problems, consumer hoarding, and shortage of components in pandemic times. Wars, closed boarders, port conflicts, and higher prices for the consumers. In recent years, the importance of functioning supply chains - and the consequences of the opposite - have become apparent even outside the research world.

"Over the past four years, our research area has become quite famous in the news. Everyone has had to learn supply chain terminology," says Ceren Altuntas-Vural, Associate Professor at Chalmers.

She was one of the speakers during this year's Northern LEAD Day on April 23, 2024, organized jointly by Chalmers and the School of Business, Economics and Law at Gothenburg University. A day that offered encounters between industry and academia, and an opportunity to listen to the latest research findings within logistics, transport, and supply chain management.

Forecasting and workarounds

In their research, Ceren Altuntas-Vural and her colleagues have reviewed liner shipping's role for robust supply chains in several projects and can state:

"Everything happening in the global economy immediately affects liner shipping".

The researchers have looked into different disruptions of recent years, and what is happening at liner shipping's end. In the acute phase of the disruptions, the industry put a lot of effort into anticipation and contingency plans.

"Forecasting and risk assessment became a daily habit, and there was a lot of focus on risk assessment and "what if" scenarios, she says.

The review of container shipping networks showed that the industry introduced various flexibility measures to respond to operational problems such as lack of capacity, port congestions or lack of equipment. For example, changes in routes, changes of container types – or in other words: a lot of workarounds to adapt to the situation.

Relationships are crucial

The studies also revealed what is truly important to manage the disruptions and mitigate the negative effects.

“It’s not about how much money you have, it's about having a good network. Relationships are crucial to getting accurate information and finding alternative solutions”, she says.

Even though the disruptions were costly, the high freight rates resulted in extreme profits for the shipping companies.

“But instead of buying other shipping companies with the large profits, several shipping companies broadened their service range with air freight or invested in decarbonization and digitalization”, she says.

Necessary to seek alternatives

Morten Brühl, VP Logistics, Elof Hansson Trade AB, pointed out that the many crises and disruptions that have hit the transport networks recently, have also led to new opportunities for actors in the industry.

When the geopolitical situation changes the rules of the game, trade patterns and freight market change. This can, for example, lead to a smaller company suddenly being able to compete with the bigger giants. And disruptions such as Finland's strikes in the transport industry and in the ports, force the concerned actors to look for new ways.

"When your usual way of reaching the market is blocked, you look for alternatives, and discover that you can buy your products elsewhere. Opportunities that did not exist before can open up. The bottom line is, for any of these disruptions there are still possibilities to do business, and to be quite profitable, if you are agile and smart about it,” Morten Brühl says.

The emergence of a “a new normal”

Out of all the disruptions, "a new normal" has emerged. The industry has adapted to the consequences and the new reality is seen as, at least "not as bad as last time."  Today, part of the "new normal" is, for example, high inflation in Europe which leads to low imports.

The Red Sea crisis has also forced significant adaptations: to avoid attacks, all major container carriers have stopped using Red Sea routes and the Suez Canal, and sail around Africa instead. A Suez Canal domino effect awaits when the former route can be used again - with, among other things, a sharp drop in spot rates, "double arrivals" of vessels, and equipment shortage in the Far East as a result.

However, Morten Brühl emphasizes what has become evident about logistics and supply chains in the era of disruptions:

"The industry is incredibly agile."

Shared experiences to avoid incidents

Two additional speakers during the day were Urban Nuldén and Ann-Sophie Sallander, Associate Professors at the University of Gothenburg. They are researching road and rail transport of dangerous goods in several Northern LEAD-linked projects. The researchers are examining how the sharing of experiences of incidents in the transport of dangerous goods can be improved, to better counter future incidents.

"Today almost only major accidents are reported, not minor incidents. We interview stakeholders about their actions connected to incidents, and what they see is lacking to distribute more knowledge to actors, Urban Nuldén says.

"We have identified flaws and problems in the chain of reporting, at all levels. But we also see a lot of possibilities for improvements. There is an enormous amount of knowledge and resources for learning, Ann-Sophie Sallander says.”

Northern LEAD Day finished with three PhD candidates' presentations:

• Sahil Ahmed, Chalmers, Cross-Functional Planning – Integration and Resilience
• Sandra Brüel Grönberg, Chalmers, Developing packaging solutions for sustainable logistics
• Johanna Rau, University of Gothenburg, Quick Commerce – Today’s Convenience-Driven Retail and Last-Mile Logistics
  
  

Text: Ulrika Ernström
Photo: Simon Fredling Jack

About Northern LEAD

Northern LEAD is a logistics competence centre formed by Chalmers University of Technology and the University of Gothenburg. The centre works as an organizer, facilitator and disseminator of high quality logistics research.