Persistent disruption
Pre-pandemic, planning global delivery times was relatively easy. Perfectly coordinated transport routes meant companies could deploy a just-in-time production system and optimise transport and storage costs with ease. Fast forward to the first lockdown in 2020 and everything changed.
Suddenly, ports were shut, borders were closed, planes were grounded and everything was thrown off-schedule. This created several issues across supply and demand – including the availability of containers which were suddenly backed up in the wrong port when they were urgently needed elsewhere.
Significant backlogs ensued with raw materials, semiconductors, and other vital components for industry all in short supply. The hold-up of crates and containers also had an effect on freight costs with some organisations quoted up to £10,000 for a container that would ordinarily cost one sixth of that. At one point, skyrocketing prices got so bad that the UK’s Competition and Markets Authority (CMA) had to step in and put pressure on shipping lines to justify costs.
Just as global supply chains were beginning to show signs of recovery, the Suez Canal was blocked by the Ever Given container ship. This key trade corridor carries approximately 12% of all global trade and offers a crucial shipping line between manufacturing hubs in Asia and the European market. Having it blocked for a week caused estimated economic damage of up to $10 billion and significant delays.
To this day, these setbacks have not been resolved. In Germany, container ships continue to be diverted to Bremerhaven and Wilhelmshaven at short notice – ports with limited infrastructure and capacity to meet the increased demand, which causes additional delays of up to two weeks.
Price wars
Ongoing congestion not only leads to disruptions to supply chains and production lines, but also to a veritable price war in the sea freight market. And even if the cost is written off, continued backlogs and congestion means there’s no certainty whether the container will actually leave the port on the agreed day and time.
This can sometimes lead to situations similar to a bazaar, where only the highest bidder – or the one with the largest volume of orders – wins. With the current situation, it’s not uncommon for the customer to only learn on the day of departure whether their goods are actually on the ship.
The situation may be set to improve in future however, with many shipping lines currently building ‘super ships.’ These will hold around 20,000 containers and offer much needed increased capacity. Of course, these will take some time to build but it’s a positive step in helping to ease the situation.
How Snom has adapted
The easing of conditions in terms of both availability of resources and capacities to transport goods from A to B has been a long time coming. Now businesses have the opportunity to adapt their supply chains – to be better prepared to master conflicts between availability and economic efficiency in the future.
At Snom, we have generally come closer together over the past two years. We’re benefitting from the synergies of long-term contracts, and from the distribution of shipping volumes across several partners. We’re always looking for ways to optimise delivery times for both imports and exports, and now we use the entire portfolio.
In addition, we focused on transport alternatives such as rail and sea/air combinations early on and now have a large network of transport and logistics companies at our disposal. As a result, the company has been able to provide goods for project businesses and customised products with delivery times of less than a month – from a product portfolio of 146 items, only 7 are currently not shippable. Thanks to the success of this strategy, we’ve also been able to avoid passing on higher transportation costs to our customers, despite the general explosion of prices in logistics.
Ultimately, the reliability of supply across the entire value chain is the challenge we – and many other businesses – are currently facing. To address this in the mid-term, we’re working on sustainable processes of change in the organisation of our supply chain, which should help to increase transparency for our business partners.
Gordon Raschig
Gordon Raschig has been working with Snom since 2008. After various roles across sales and shipping departments, he developed a passion for logistics, which he has been successfully managing since 2018.
About Snom
With over 10 million devices installed and offices in the Benelux, United Kingdom, France, Italy, Russia, Spain and South Africa, Snom Technology is a globally recognised manufacturer of IP telecommunications solutions for professional use.
Founded in 1997 and part of the VTech Group since 2016, the company continues to design and develop its products in Berlin and attaches great importance to quality and safety. Snom uses its 25 years of experience and innovative strength to tackle new mobility challenges and increasing digitalisation with cutting-edge technologies that are adapted to all communication needs and environments.
The company’s worldwide sales network includes many renowned distributors and over 10,000 specialist dealers. They benefit from a dedicated partner program as well as personal remote and on-site support services that, alongside its leading technology, contribute to Snom’s outstanding international reputation.
