Supply Chain Chaos To Last Two More Years: Toll Chairman
Supply chain chaos will reign for at least two more years, warns Brambles and Toll Group chairman John Mullen, as the Ukraine invasion impacts material costs, shipping bottlenecks, and production delays.
Mullen warns that even something as innocuous as the price of wooden pallets has thrown shipping into disarray.
“Before Covid, a wooden pallet cost approximately $US18, but it’s reached as high as $US50 and is still far higher than it was two years ago,” he told The Australian.
“At the moment we’re taking all the pallets we can get, and we don’t have a single pallet spare.
“If you go out and buy millions more pallets at very inflated prices, and then retailers and manufacturers go back to normal, you’re going to be stuck with millions of excess pallets.
Mullen is more spooked by the prospect of ongoing war destroying any chance of the global supply chain recovering.
“What I think would be a tragedy is the risk of a bipolar world divided into the Chinese and Russian sphere of influence on one side, and traditional Western countries on the other,” he said.
“You would see a lot of duplication and increased costs as the two power blocs concentrate all of their activities on resources produced in their own countries.
“We really no longer have our own capabilities in any of those sectors, and even if we produce slowly and expensively, at least we can produce.
“In a time of war or real geopolitical unrest, where you don’t have the cargo-carrying capacity that Australia had during Covid, you’d see major industries in real difficulty very quickly.
“I’m not suggesting we should have gone on subsidising an unprofitable car industry but one of the downsides of relying on imports is that it does leave you very vulnerable in times of conflict.”