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5 trends disrupting the traditional wholesale distribution model

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Climate changing the economics of the supply chain

Climate change driving extreme weather

Wild fires sweeping New South Wales in temperatures of 50 degrees centigrade; the worst storm in 20 years bringing snow to the Middle East; one of the wettest years on record in the UK, climate change is throwing global weather patterns into turmoil. One of the biggest changes observed is melting of sea ice in the Arctic. Last September it was 18% lower than the previously observed record minimum set in 2007. While this may hold some serious implications for further extreme weather, it also brings the real prospect of changing the economics of manufacturing goods in Asia-Pacific for distribution in Europe.

Significant potential for change in world shipping

The shrinking Arctic sea ice opens up the Northern Sea Route, sometimes called the North East Passage. This allows shipping to pass from the Pacific via the Bering Strait and navigate along the north coast of Russia and down past Scandinavia into the North Sea. Through the Suez Canal, today’s usual route, the distance from Shanghai to Rotterdam is 19,300km. Via the Northern Sea Route it is just 14,875km*, a 23% reduction in distance and perhaps 10 days in journey time. At the moment opening up regular commercial routes using the North East Passage seem some way off; however there is another change coming much sooner.

Although likely to be of less impact to Europe, the widening of the Panama Canal is set to complete in 2015 and may influence the pricing structure of world shipping. The current limitations of the canal restrict ships sizes to those carrying 5,000 20-foot standard TEU container units. Widening the canal enables ships with a capacity of up to 13,000 containers to take the 50 mile short-cut from the Pacific to the Atlantic.

Be ready for change with NetSuite

The potential impact of such changes to global shipping on wholesale and distribution are significant; greater capacity and shorter routes suggest lower transport costs and faster restocking, both of which offer the possibility of reduced TLC (Total Landed Cost) for goods. When change arrives, you quickly need to be able to exploit it. NetSuite cloud-based ERP enables you to factor in the impact of such variables on your supply chain.

We are one of only two UK Three Star Award winners, recognised by NetSuite for our expertise and commitment to delivering customer value. With a NetSuite ERP solution custom implemented by BlueBridge One, you can be ready for whatever change brings. Discover pricing for NetSuite by clicking here.

Follow this link to see The Geography of Transport systems webpage at New York’s Hofstra University.

* - Academic attribution: Rodrigue, J-P et al. (2012) The Geography of Transport Systems, Hofstra University, Department of Global Studies & Geography, http://people.hofstra.edu/geotrans

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