The impact of COVID-19 on Supply Chain Management

The impact of COVID-19 on Supply Chain Management

The COVID-19 pan­de­mic has had a dis­rupt­ing impact on busi­nesses around the world and the glo­bal raw mate­ri­al mar­kets are facing many turbulences.

Most mar­kets and count­ries have been limi­t­ed in eco­no­mic acti­vi­ti­ties due to rest­ric­tions and lock­down measurements.

In the past year, the spread of COVID-19 has dis­rupt­ed sup­p­ly chains glo­bal­ly in dif­fe­rent ways:

  1. Wea­k­e­ning demand for some companies
  2. Sky­ro­cke­ting demand for sel­ect companies
  3. Crea­ting uncer­tain­ty in obtai­ning raw materials
  4. Impac­ting the abili­ty to ship and recei­ve pro­ducts on time due to shorta­ges and logi­stics bottlenecks
  5. Ensu­ring work­force capa­ci­ty to assem­ble and ship products

As of the begin­ning of March 2021 the Brent Cru­de Oil is alre­a­dy on the level of $63 with a poten­ti­al to $65 per bar­rel by sum­mer 2021 (source: Gold­man Sachs). Respec­tively this means a pri­ce adjus­t­ment of 20% com­pared to Janu­ary 2021. Car­bon Black for­mu­la pri­ces – based on LSFO 1% – fol­low this trend, the­r­e­fo­re the expec­ted post-covid mar­ket reco­very is being accom­pa­nied by signi­fi­cant increa­ses in car­bon black prices.

Logi­stics addi­tio­nal­ly remain a chal­len­ging aspect, due to the cri­ti­cal shorta­ge of con­tai­ners, spe­ci­fi­cal­ly coming from Asia but also from other parts of the world. In Decem­ber spot freight rates were even 250% hig­her for the Asia to Euro­pe rou­te. Lock­downs and limitations/restrictions dis­tur­bed logi­stics and pro­duc­tions and as a con­se­quence cau­ses a para­dox situa­ti­on that the­re are about 180 mln con­tai­ners world­wi­de, but not in the requi­red places.

With lear­nings from the out­break,  the sup­p­ly chain ope­ra­ti­ons will have to move towards a more com­pre­hen­si­ve proac­ti­ve mode­ling. Com­pa­nies should review their sup­p­ly chain stra­tegy more deep­ly and in each dimen­si­on and fore­cast demands in clo­se col­la­bo­ra­ti­on with the supplier.

With all the chal­le­ging aspects, Pen­ta­Car­bon GmbH is loo­king for­ward exten­ding suc­cessful part­ner­ships with its’ customers.

Plea­se cont­act us for an indi­vi­du­al tech­ni­cal con­sul­ta­ti­on, pro­duct recom­men­da­ti­on and inquiries.

 

Contact us

Pen­ta­Car­bon GmbH
Anna­berg­stra­ße 168
45721 Hal­tern am See

Get direc­tions