14 March 2023
Freight News

Hesitancy in Reducing Inventory, Ocean Carrier On-time Performance Still in Question

Slowing demand is putting pressure on European shippers to cut working capital tied up in excess inventory, but ocean schedule reliability has yet to improve to a level where buffer stocks can be reduced, according to a BASF executive.
Carsten Weers, vice president of logistics procurement at the Germany-based chemical shipper, said during a webinar hosted by Hapag-Lloyd that carriers’ on-time performance was still well below pre-pandemic levels.

Sea-Intelligence data shows schedule reliability improved to 52.1% in January 2023 on the Asia-North Europe trade, from 17% in January 2022. However, this is still considerably lower than then 78% recorded in January 2019.

Memories of recent supply chain outages are still on the minds of shippers and their service providers, according to a Reuters Events survey outlined in a report, The State of European Supply Chains 2023. Although many in the European supply chain sector expressed concern about the prospect of a global recession, the surveys showed a reluctance to to reduce inventories aggressively. Nearly 50% of the manufacturers, retailers and logistics service providers surveyed said they expected inventory levels to increase in 2023.

“The surprising robustness in inventory expectations in the (Europe/Middle East/Africa) region is likely to reflect the fact that high levels of disruption are not yet considered over,” Alex Hadwick, head of supply chain research at Reuters Events, noted in his analysis of the survey findings. “There is a preference to maintain buffer stock so as not to be caught out,” he added.

Source: Journal of Commerce

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