Weathering the Storm of the Great Supply Chain Disruption

– TOP Beraten at the 2nd German-Malaysian Business Forum

Weathering the Storm of the Great Supply Chain Disruption

Global supply chains have been strained by a seemingly never-ending line of disrupting incidents. The chain of disruptions started with the Covid-19 pandemic, which heavily impacted economies. The Pandemic is not a short-term crisis but will have long-lasting implications on international trade.

The blockade of the Suez-canal prolonged an immense amount of cargo from reaching their destinations on time. Current challenges such as the Russian-Ukrainian war and the lockdown of Shanghai have greatly impacted the supply and trade of goods worldwide. The Malaysia-German Chamber of Commerce and Industry (MGCC) dedicated their 2nd German-Malaysian Business Forum to this topic, organising an event with industry experts who shared their insights and engaged in a discussion on the challenges of the supply chain disruptions and possible solutions. 

Raymond Teoh, Associate Partner & Head of Compliance, and I (Tobias Grobitsch, Trainee at TOP Beraten) joined this very insightful event, at the Doubletree Hotel on the 19th of May.   

It was organized in three sessions starting with Mej. Prof. Logistician Ts. Chang Kah Loon, Professor of Practice (Logistics) / Senior Logistician President of The Society of Logisticians, Malaysia (LogM) / Director, AK SHIPPING (AK Ventures Berhad). He gave a general overview of the global situation and explained the general supply chain disruptions, caused by the pandemic or the Russian-Ukrainian war. For example, many manufacturers struggle with waiting times for parts or materials necessary to produce their products. One of his proposed solutions was to encourage local sourcing.    

Prof. Chang further explored the topic and stated that many companies are in discussion with their suppliers on whether it is possible to change the mode of transportation to air freight. After this general overview, Daniel Bernbeck, the Executive Director of MGCC moderated the second session. The featured speakers were:

In this session, the invited experts explained the current supply issues connected to the sea, air, and land freight.

Mr. Neelsen held a very informative presentation focusing on sea freight and explaining the increase in shipping rates and the lack of capacities. It was interesting to hear that the waiting time for vessels (especially at high volume ports) increased substantially in 2021, which consequently decreased the shipping capacity by 18%. The main reasons for price increases in shipping rates are the rising oil prices and the decline in the shipping capacity of sea freight. 

Nevertheless, the industry expert is optimistic that freight rates will drop in the near future but he also predicts that they will not return to pre-pandemic levels any time soon.

The CEO of PTP highlighted a factor that seemed to be neglected with all the new problems: climate change. He predicted that in the future, the effects of climate change such as typhoons and hurricanes will pose a major threat and will impact global supply chains consequently causing major disruptions with global consequences. Adding on to the topic of sea freight, Mr. Neelsen emphasized the strong position Malaysia has when it comes to commercial ports. Among the 20 biggest ports in the world, two are located in Malaysia. The first is Port Klang in 12th place and PTP in 15th place. 

PTP had a year-on-year growth rate in 2021 of 13,7 % which is the 4th highest rate among the 20 biggest ports. Malaysia’s strategic location between China and Europe supports the growth of ports and strengthens Malaysia as an attractive investment destination. 

The next speaker, Mr. Kirrbach focuses his presentation on air freight and showed several graphs that explained the development of the industry’s supply and demand. While the demand for air freight compared to pre-pandemic levels increased in 2022, the capacity decreased. 

The reason for the decreased supply during the pandemic is that the capacity of cargo moved in passenger flights (belly freight) decreased and is still not back to normal. Now the airspace over Russia and Ukraine is restricted, which prolongs the routes airplanes have to take. Consequently, more fuel is needed and less weight can be applied for the longer route. 

The last speaker for this session, Lothar Lauszat gave his insights on land freight and talked about challenges like the rising demand in warehousing space and the shortage of truck drivers and their rising negotiation power.

Dr. Shardul Phadnis moderated the third and last session for this event. The three guests:

talked about the impacts and solutions from a Malaysian perspective, each giving three principles that their companies implemented to deal with the supply chain issues.

The main principles and actions that were stated by the guests were: a shift of internal production capacities; becoming more agile; improved supplier relations management, making the supply chain more resilient by relying on a broader network of suppliers and by going into different tiers of suppliers; also working on closer cooperation and more visibility of lead time and even considering to increase inventory levels.

Sponsors of the event were Port of Tanjung Pelepas (PTP) (Gold sponsor) and Infineon Technologies (Malaysia) Sdn Bhd and Beckhoff Automation Sdn Bhd (Logo sponsors).

After the closing remarks of Mr. Bernbeck, the invited guests and participants were able to enjoy snacks together and engage in conversation and networking. It was our pleasure to meet many interesting people working in the industry and hear their opinions on the matter of supply chains. TOP Beraten deeply thanks the Malaysia-German Chamber of Commerce and Industry (MGCC) for organising this informative and connecting event. We also thank all the esteemed speakers for their comprehensive insights.

Recent Posts