The pandemic has shown us just how exposed Europe in particular has been to supply chain risks, with politicians and business leaders now waking up to this risk, further highlighted by the closure of the Suez Canal earlier this year. But this is not just about fashion items, toys, or computer chips - everyday essentials are currently facing threats within the chain. So, how are businesses working around these problems?

Against a perilous backdrop of HGV driver shortages across Europe, a record number of job vacancies and low unemployment in many economies, companies are thinking about how to address supply chain issues as an opportunity rather than a problem – manifesting itself in the following ways:

Automation
Many companies originally off-shored to Asia due to the labour cost arbitrage. However, as automated production grows, the labour cost component becomes less significant, as well as the types of skills needed. Robotic engineers and servicing companies are often more readily available in Europe than Asia to support highly automated production.

Social policy
The human tragedy associated with migration across the Mediterranean continues to make headlines. Its prevention lies in the development of Africa’s economies, to enhance opportunities for migrants in their own countries. Many companies recognise that setting up manufacturing operations in these countries provides a similar labour arbitrage as that in Asia - but with less supply chain cost and the added opportunity to honour Corporate Social Responsibility.

Sustainability
Reducing the environmental impact of shipping goods around the world is now increasingly important to businesses and investors. This theme is also particularly important to customers, as the desire to ‘shop locally’ for produce increases.

Africa’s growth and opportunity
By 2030, Africa will have 17 cities with populations of over 5 million, creating a market for goods and a strong production resource. The countries of North Africa continue to hold a strong relationship with Europe, with close links stretching back centuries. Many of these countries also have a history of mining, oil and other raw material production, but now consumer goods and pharmaceutical companies are being established, such as in Morocco, Algeria and Egypt.

Incentives
A number of constraints around state funding in Europe have been increased or temporarily waived to help stimulate investment in a post-pandemic economic climate - creating short-term financial opportunities.

Rising Shipping costs
In the past year, maritime shipping costs surged higher than ever before, fuelling price inflation and putting more weight on balancing the re-shore vs off-shore equation.