Manufacturing in trouble as shipping hikes

Written by Staff Writer

Melbourne and Istanbul are in the midst of what looks like a manufacturing crisis.

A 1,750 ton ship carrying kit sets to factory in Indonesia has stranded 60 people on board and production is said to have ground to a halt in Indonesia.

In Melbourne, the state-owned SABIC Yayasan Berhad, or Sulawesi or Sasakan SABIC (Australia) is said to be in a similar bind: Its factory in Jbali, South Sulawesi, has been taken hostage by protesters.

Experts say these examples illustrate the increasingly difficult conditions under which small- and medium-sized enterprises are operating.

Experts say supply chain chaos may lead to product shortages this holiday season. Credit: NASA Earth Observatory

FOCUS: How to get supplies when the cost of getting them from Asia skyrockets

Brent Lowe from Australia’s supply chain think tank Uncertainty Growth Australia told CNN Business, “In the global supply chain, markets are generally dysfunctional. Because of increases in transportation and warehousing costs, a lot of products cost much more to bring into the region or you can’t get the product as quickly as you could previously.”

Lowe added, “Or because there is a mismatch between supply and demand, you may see product shortages occurring on various occasions between both periods of instability.”

Because small businesses, especially in the energy sector, deal with a number of extremely volatile markets each day, this creates major hurdles.

Feeding a population is still one of the most challenging things to do today – here is why. Credit: Matthew Marenchen

“Logistics is an extremely complicated industry in terms of how it is characterized in order to grow businesses and you need a lot of expertise and if you don’t have that knowledge or skills, it will be very difficult for you to solve these issues and to act in order to keep your business running,” Lowe said.

Daniel Szplivniewska, chairman of supply chain consulting firm Future Supply Chain Solutions, said that companies and individuals must monitor how events in one part of the world affect supply or demand to the whole system.

In the last week, for example, freight costs have risen in Asia, while grain shipments in Russia are at a premium after a severe drought there.

“This has added a lot of cost to exports to Europe and European companies need to consider that,” Szplivniewska said.

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