Planning for a more ‘normal’ festive season

by Denys Hobson. Black Friday and the festive season are traditionally a critical time of year for retailers, however, this year expectations are once again having to be adjusted due to chronic and acute supply chain issues. Both retailers and consumers may soon have to confront the harsh reality that goods may not be on shelves in time, if at all.

The challenges facing the global shipping and logistics industries have been well-documented, but a new, and potentially highly disruptive factor, has now come into play in South Africa: strike action. The strike action within Transnet, while potentially catastrophic, has partially eased and supply chains have avoided a big risk with dramatic destabilisation.

The strike could have cancelled out the more recent and welcome news regarding shipping capacity, schedule reliability improvements, and reductions in vessel arrival delays. However, given the recent movements where UNTU has already accepted the proposed salary increase and SATAWU agreeing to return to work– delays may not be as harsh as if the strike was prolonged for a longer period.

On the positive side, thankfully, we are starting to see port productivity improving in ports across the country, which will give many retailers some hope that they may meet the demand of Black Friday and the festive season. With consumer demand set to rise drastically in the run-up to the festive season, importers and retailers are therefore under pressure to ensure that they have sufficient stock – which of course depends on the entire supply chain functioning effectively.

Plan ahead

While air freight can close some of the capacity gaps, it does come with significant cost implications. However, the reality we are facing is that global supply chain disruptions are too frequent to not plan ahead. So, I guess the question to address is, are retailers really out of the woods? Are there obstacles to be expected and how can they mitigate against them? Think of rising interest rates, a weaker Rand, elevated fuel prices and longer funding cycles, never mind untimely supply disruptions.

Despite the outcome of the strike, retailers and importers will have to continuously re-assess a series of interrelated and seemingly contradictory trends: declining shipping demand and rate reduction, easing of port congestion, and declining sea freight rates… This means understanding how to manage and monitor all these factors – all at once. Any importer or retailer hoping to profit from this year’s festive season – and enjoy continued success – will need to work and partner with companies that can not only offer ways in which to optimise cash flow; but understand how to navigate the delays and unexpected costs. Without this, retailers could find their trade cycles having a very real impact on their operations.

Main image credit: Pixabay.com.

Denys Hobson is Head of Logistics, Investec for Business

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