Maersk Report Reveals Ongoing Supply Chain Disruptions & How European Shippers Are Responding

Earlier this month, Maersk released a report indicating that three out of four shippers operating in Europe have dealt with disruptions in their supply chain over the past 12 months. Even more alarming is that more than half of those affected are experiencing a serious impact on costs.

Maersk, an international logistics company and the world’s second-largest container shipping company, envisions becoming the ‘Global Integrator’ by providing integrated logistics solutions that promote a connected, agile, and sustainable future.

Maersk surveyed over 2,000 of its customers across Europe regarding their supply chains over the past 12 months. Of those surveyed, 76% reported experiencing supply chain disruptions, which caused knock-on effects and delays in their operations. A startling 58% of those who experienced disruptions stated that the cost effects exceeded their predictions.

Twenty-two percent of respondents said they had encountered disruptions more than 20 times, only 20% stated that they were able to respond promptly to these disruptions, and one in three reported struggling to obtain the materials necessary for their production operations.

This survey underscores the reality that although supply chains have largely recovered from the long-lasting disruptions caused by the COVID-19 pandemic, the landscape in which supply chains operate remains highly disruptive. Maersk’s report cites a McKinsey research report from 2022, which showed that 97% of companies worldwide made significant changes to their supply chains to become more resilient, such as multi-sourcing, regionalization, and inventory changes.

Two key reasons stand out among the many causes for this continuing disruption: geopolitical tensions and conflicts, such as the wars in Ukraine and the Middle East, and the dangerous conditions in the Red Sea, as well as severe weather conditions largely attributed to climate change. This includes low water levels in navigable rivers and canals, and destructive floods that damage infrastructure, as seen recently in Spain. This is consistent with Maersk’s survey, as 80% of respondents view geopolitical conflicts and instability as the largest risk to supply chains this year.

“If there is one thing we have learned recently, it is that disruption is imminent, and we know from our customers that they share this view. But very importantly, we see that European businesses are aware that the best way to tackle disruption is by increasing resilience in supply chains,” said Aymeric Chandavoine, President of the Europe Region at A.P. Møller-Maersk.

But how are companies responding, and what measures are they taking, or considering, to become more resilient in the face of disruption? Maersk explores the answers to these questions as well.

New Sourcing Locations

Maersk found in the survey that European businesses are certainly considering new sourcing locations, as 53% of those surveyed indicated they are contemplating this option due to disruptions. Of this group, 33% would prefer to choose a location either close to or within European shores. The most commonly reported locations include:

• Turkey (11%)
• Egypt (7%)
• Poland (6%)
• Morocco (3%)
• Romania (2%)

These decisions will be heavily influenced by each business’s needs, as well as consumer perception. Some sourcing locations may not be viewed as favorable by consumers in certain parts of Europe.

The survey further indicates that the first steps toward making Europe more self-reliant for its sourcing are already being taken, making this vision more of a reality.

Investing

Maersk found that, as another solution to disruption, European businesses are showing a willingness to invest in solutions that help their supply chains become more resilient. There are three key areas where companies are focusing their attention:

• 33% of respondents stated that they are investing in data sharing and communications improvements, particularly in the form of monitoring technologies, tracking technologies, and visibility solutions. The main struggle in this area is the current lack of standardized solutions.
• An additional 33% said they are investing in efficient planning and flexibility to better respond to risk and disruptions. More than a quarter of all respondents acknowledged the importance of having a precise understanding of transport availability and reliability. Businesses must be ready to respond to dynamic market conditions, customer demands, and supply chain dynamics.
• Lastly, nearly another 33% reported investing in their ability to more accurately, efficiently, and effectively predict and respond to consumer demand. This is especially important in today’s environment, as supply and demand have fluctuated drastically since the pandemic, making inventory management particularly challenging.

No single solution will work for every company, but the encouraging sign is that businesses are exploring a variety of potential solutions to help achieve supply chain resiliency.

Sustainability

Given the dynamic environment in which supply chains operate and the disruptions they have faced and continue to face, it might be easy to assume that businesses would lose sight of their previous sustainability initiatives. However, it is encouraging to note that Maersk’s survey shows this is not the case.

To assess this, Maersk compared the responses to this survey with those from a report it published last year tracking European businesses’ progress toward sustainability in logistics:

• While roughly 33% of those surveyed in 2023 reported not having a sustainability strategy for logistics in place, that number dropped to almost a quarter of respondents this year.
• In 2023, only about 20% said they were either committed to or proactive in implementing sustainability initiatives in their logistics, whereas this year, that figure rose to 50% of all businesses surveyed.

Companies are increasingly aware of public opinion on sustainability-related issues. A recent Nielsen report shows that, among global consumers, 66% are willing to pay more for a more sustainable product. In addition, the European Union has rolled out new legislation, such as the Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM), which imposes requirements for businesses to operate with sustainable logistics.

While this report highlights the past 12 months, the data remains vital for the future of European supply chains, both in the short and long term. For businesses that are taking action to become more resilient, these steps may well be the key to their success and help them get ahead of their competition. Conversely, for businesses that are lagging in adapting or struggling to do so, the blueprint for achieving resiliency and potential success is already being established.

Maersk also released another report earlier this month, providing an update on the European region's market, which outlines and highlights potential disruptions European businesses may face in the near future.

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