After six rather long days, European air travel has begun a process toward catching up but as noted on our original commentary, the effects of the shutdown are making themselves present across many European focused supply chains. The products most affected are time and value sensitive and include agricultural and food products, high technology and telecommunications components, computer chips, medical supplies and apparel.
At the beginning of 2010, I noted in a blog commentary posted on the Kinaxis Supply Chain Expert Community, observations that inventory levels across the EU were razor thin amid doubts among European business executives regarding the robustness of any business recovery in 2010. That situation has now manifested itself in business media headlines describing the current effect of this flight shutdown. This morning’s Financial Times article, Pressure grows on supply chains, (free sign-up preview account may be required) noted that some European automobile assembly lines may suspend production due to a lack of key electronic components. BMW and Nissan indicate that they plan to suspend some European production this week because of disruption of electronic components. Flower producers in Kenya, who ship 82% of flower harvests into the EU countries, are sustaining losses of $2 million per day because they cannot get their products shipped. The Times notes that other industries are stockpiling goods in Dubai where the large air freight terminal is adjacent to one of the world’s largest container terminals. Logistics professionals selected Dubai because of the flexibility to fly goods to cleared European cities, as well as trucking or ocean transport options, depending on expected transit times. The biggest concern remains real-time visibility as to the status of shipments, and air carriers are already modifying expectations regarding transit times.
It will no doubt take weeks for the entire European air transport sector to gain some sense of normalcy. European logistics professionals will practice their skills in working among various alternative transport networks.
Meanwhile let us all hope that Katla, the other Icelandic volcano does not decide to blow. That could well be an even more disruptive supply chain incident.