UP FRONT 01
EDITOR’S LETTER
Eighteen months have passed since the novel Coronavirus, generally known as Covid-19, first made its way out of China and into the mature markets of Europe and North America. It brought with it untold stresses, forced us to think differently about how we work, and caused an immense amount of misery and grief. Many of us took some time to wonder how different life might be once we came out the other side of the global pandemic and emerged into what became thought of as the ‘new normal’. Indeed, that was a fundamental question posed at last year’s EPCA Annual Meeting. And as we prepare for another virtual EPCA event next month – did we expect restrictions to last this long? – I am beginning to think we are already living in this new normal world. Even before the virus arrived, there had been talk for some time – again, not least at the EPCA Annual Meeting – of the increasing volatility, uncertainty, complexity and ambiguity (often condensed to the rather ugly acronym VUCA) being displayed in global supply chains. Well, if we though we were suffering from a bad case of VUCA in 2019, we hadn’t seen anything yet. I have spent a large part of this year talking to executives across the supply chain – that’s my job, after all – and
stresses are apparent to everyone. As the half year results have been rolling in over the past few weeks, many corporations active in the supply chain have done quite nicely out of this massive dose of VUCA. Many chemical distributors, several storage terminal operators and some shipping companies have reported significant increases in revenues and profit. It has also been noticeable in some quarters that companies have decided that this is the time to grow: size confers some protection against volatility, as access to a larger pool of assets allows them to be deployed more flexibly. This seems to run counter to the assumption that agility is key at such times and that it is the smaller operators that are nimble enough to take advantage. The recent spate of moves to consolidate the chemical and LPG tanker sectors suggest that not all agree. The major chemical distributors, too, have been active in the M&A sector, expanding their reach into growing markets. But to return to my earlier point: is this going to be the way of things for the foreseeable future? While vaccination programmes have taken the sharpest stings out of the pandemic, they have not cleared the way for a full return to the ‘old normal’. New variants have emerged and made
I hear the same story from all quarters. Suppliers are unable to provide raw materials on time; prices are rising all round; ocean freight costs have skyrocketed, even as reliability has plummeted; inventories have been built up and then drawn down, only to reappear somewhere else. It doesn’t matter if you are a transport operator, shipper, receiver or a provider of equipment and services, the same
their way around the world, forcing shutdowns at ports here and there that have continued to create VUCA in the supply chains. Until we find a way to eliminate the virus altogether, it seems to me that this is going to be ‘normal’ from now on. Peter Mackay
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