Tuesday 25th Sep 2018 - Logistics & Supply Chain

European commentary

At the end of August, we once again saw the power of natural events to disrupt the stability of the modern society we all take for granted. This time, even as we extended our sympathy to those involved in Hurricane Katrina, there was a chilling recognition that here was an event of such economic consequence that it would affect us all. Indeed, within days the price of fuel on forecourts across the world told the story.

The implications for global trade and the cost of running our societies are obvious, given our dependence on fuel for the movement of goods. For a while the sniff of crisis was in the air.

But to my mind, there is a positive side to anything of this sort and I am inclined to see the events of recent weeks as a wake up call. Whether we recognise it or not, there is a global energy crisis approaching by stealth. Energy resources of every kind are limited and we are prodigious energy consumers. It takes a particular event to draw our attention to this – the indirect consequences of Hurricane Katrina do just that.

I have referred to the need to change our behaviour in this column on previous occasions. For too long we have lived in an era of cheap transportation, based on a combination of cheap fuel and more efficient logistics practice. As a result, the overall cost of some activity has been obscured. We have become used to reaping the benefits of global manufacture based on the cheap movement of goods while the inherent low cost mobility of the private car has become almost a right in the developed world and cheap air travel has shrunk our horizons. But all this is unsustainable if one of the key components, the price of fuel, increases as a result of shortage.

Hurricane Katrina provides a pointer to the delicate balance of the equation, demonstrating the vulnerability of our economies to the shortage of both raw oil and refinery capacity. Common sense tells us our resources are not limited and we must discipline our behaviour as well as hasten the search for alternative energy. Given the pace of development in hitherto less developed economies, (such as the exponential increase in private cars in China), this issue is beginning to press closely.

Somehow, I don’t think market forces can solve this one, though they have a part to play. We, as logisticians, really have a duty to at least spell out the true cost of what is asked of us, and to point out the choices. This should be complementary to a duty on governments to face up to the challenge of changing behaviour – for example, by reducing car journeys by improving public transport.

Graham A Ewer CB CBE , President ELA

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