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Supply chain imbalances will keep pushing logistics costs

Rising logistical costs have become a growing concern for governments, businesses, and consumers worldwide. The labour-intensive logistics industry is expected to see a steep rise in wage costs over the next two years fuelled by labour shortages, predicts a report compiled by Reefknot Investments, a joint venture between Temasek and Kuehne + Nagel, a global logistics major.

How should businesses – including those in Southeast Asia combat these rising costs? Per NEX-ST, the top two measures to mitigate climbing costs are technology-related, specifically improvements in demand prediction and supply chain visibility. For example, P&G, one of the world’s largest consumer goods manufacturers, highlights actual demand visible by picking up scanner data at the point of sale and feeding it into plant production schedules.

Key findings of NEX-ST insights & Predictions that are based on surveys with senior supply chain leaders in the APAC region over the past 24 months:

*How to increase supply chain resilience? Respondents are more likely to engage in regionalisation (75%) and supplier diversification (73%).

*Supply chain disruptions due to the Russian-Ukraine War may have contributed to a steep jump in raw materials and transport costs, with supply chain leaders seeing another 10% increase in costs in the next 2 years.

*Rising costs, especially manpower and raw material are of significant concern over the next 24 months.

*Similarly logistics and inventory costs rose by 22% and 25% respectively in 2021.

*There is a labour mismatch in logistics and supply chain, a highly labor-intensive industry. With the demand for workers exceeding supply, the cost of labour will drive the most significant rise in cost for the multi-trillion dollar industry, increasing 11% in the next 2 years.

*Technology and innovation will boost visibility, efficiency, and resilience in the logistics space, especially warehousing and transportation.

*Interestingly, plans to add/enhance e-commerce capabilities are rated lowest at 63% among respondents, who do not view e-commerce as a solution to lower costs.

Based on the latest report and its key findings/predictions about the supply chain and logistics business we would be delighted to set up an interview with Mr Marc Dragon, Managing Director of venture capital (VC) fund Reefknot Investments, a joint venture between Temasek, Singapore’s sovereign fund and Kuehne + Nagel, a global logistics major.

As a dedicated VC fund focusing on the supply chain and logistics sector, Marc is happy to share insights on how global enterprises are looking to build more resilient, collaborative, and networked supply chains. He can talk about innovation in the warehousing space including robotics. What leaders in the APAC region are doing in terms of digitalising inventory and fulfillment to manage better? Innovative startups in the supply chain domain and how they are looking at handling challenges and uncertainties through technology.
Source: Reefknot Investments

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