Risk to retail supply chain escalating, warns Braithwaite

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Uncertainty in forecasting retail sales volumes and a financial crisis in the freight industry is pushing up the level of risk for retailers in the run-up to Christmas, Alan Braithwaite of LCP Consulting has warned.

“In some cases ocean carriers are cancelling contracts in an effort to improve rates and some are trying to impose unilateral increases in the market. This practice is also evident in the air cargo sector with recent announcements from Lufthansa. Retailers need to be aware that for freight operators the concept of customer care is no longer a priority in their current challenged state,” said Braithwaite, who is chairman of LCP Consulting and visiting professor at Cranfield.

“The risk for retailers will be when carriers are forced to remove further capacity to address their continuing financial crisis and this combines with better than forecast sales. This will undoubtedly put pressure on availability as carriers of all kinds will not hasten to put capacity back in the market or to re-adjust from their slower and less reliable services.”

Research by LCP also found the financial crisis has seen the reliability of international shipping decline.

“As ships have been slowed, ports and container transloading has increased and shippers’ cargos may simply be left behind. The consultancy says that while there is no statistical evidence that retailers are consistently late with their orders and supplies for Christmas, there is already some anecdotal evidence of this.”

Other findings from he research include:
* Ocean and air freight volumes for the first quarter of 2009 were down by as much as 20 per cent versus same period last year. 

* UK port traffic volumes had a 19 per cent decrease versus the same period last year, while European ports range from a 13 per cent decline in Hamburg to more than a 30 per cent fall in Barcelona.

* Some of the American west coast ports show equal falls of around 20 per cent versus previous year.

* Chinese exports are reported to be 23 per cent down versus last year, with an excess capacity of 35m TEU’s at China’s ports.

* Air freight volumes follow a similar trend, as latest global figures revealed a continued decrease in volume versus last year, running at similar levels to sea freight.


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