We are thrilled to highlight the recent feature of Daniel Karlsson, Managing Partner of ARC Consulting, in a leading Norwegian newspaper, Logistikk Inside, where he discussed the latest developments in global supply chains. Logistikk Inside is a leading newspaper renowned for its deep industry insights in the field of logistics.
In the interview, Daniel Karlsson discussed the escalating crisis in the Red Sea and its repercussions on global supply chains, shedding light on its impact on Scandinavian businesses. Furthermore, he also discussed the emerging trends of nearshoring and “friendshoring”. Notably, he warned about the potential cost increases facing businesses and consumers alike due to the persistent threat of skyrocketing freight prices. He emphasized that freight prices could increase substantially in the near future, underscoring the severity of the situation in the Red Sea and the lack of improvement in the shipping crisis.
Also highlighted in the article, is the significant increase in inquiries from clients affected by the global shipping turmoil, particularly those with operations or significant purchases in Asia. European businesses, in particular, are seeking assistance in exploring options to de-risk their supply chains amid the logistical challenges in the Suez Canal and the Red Sea.
The interview also touched upon the prevailing trend of companies moving their procurement and production to Asia in recent years due to cost considerations. However, disruptions during the COVID-19 pandemic and incidents like the grounding of Ever Given in the Suez Canal marked a turning point, further accelerated by the recent attacks in the Red Sea.
Daniel Karlsson Discusses the High Demand for Near-and Onshoring Solutions
“The more times you get ‘burned’ by supply chain problems, the more you’ll consider whether it’s a good idea to move production closer to the domestic market. We have therefore experienced a very high demand from companies considering moving all or parts of their production to Europe or sourcing goods from Europe instead of Asia. We have conducted many studies for our clients in this field, and for some, it definitely makes sense, while for others, it remains just a thought,” said Daniel Karlsson.
”Nearshoring” in logistics and production refers to the practice of moving production or logistics services to countries that are geographically closer, rather than outsourcing to distant countries. The main reason for choosing such a strategy is to reduce the distance between production and the market, thereby reducing delivery times, transportation costs, and strengthening the flexibility of the supply chain. With unrest in the Red Sea, war in Ukraine, and memories of the Ever Given and the pandemic still fresh in mind, many Norwegian companies are more open to making a strategic shift in their flow of goods. Delve deeper into the impacts of the Red Sea disruptions and discover strategies to navigate the shifting geopolitical dynamics.
The Emerging Trend of Friendshoring
“Friendshoring” is a term closely linked to nearshoring, but it pertains to the strategy of outsourcing production and procurement to partners in countries deemed “friendly.” This approach involves a heightened level of political consideration, such as the case when Norwegian firms severed all trade connections with Russia post the Ukraine invasion.
Regarding alternative production locations, he discussed a surge in interest among clients for production in Eastern Europe, with many Swedish companies already taking steps in this direction. ARC Consulting is actively involved in providing analyses and recommendations on the feasibility of moving production from Asia to Europe, considering factors such as cost, supplier base, and geopolitical climate to our clients.
Furthermore, he addressed the increased costs and deteriorating investment climate in China, along with rising geopolitical tensions, which are prompting more companies to consider a diversified approach to their supply chains. While some companies may contemplate bringing volumes back to Sweden, it was noted that countries with lower costs and larger supplier bases, such as Romania, Bulgaria, and Turkey, are increasingly emerging as favorable alternatives. Read more here about Daniel Karlsson’s forecasts for Supply Chain Turmoil Amid Red Sea Crisis in Dagens Industry.
As the supply chain landscape undergoes significant transformations, ARC Consulting remains committed to guiding businesses through strategic decisions in these challenging times. The insights shared in the interview provide valuable perspectives on the evolving dynamics of global trade and the imperative for companies to adapt to emerging challenges.
”As highlighted in Logistikk Inside, my analysis emphasizes the dynamic changes occurring in the worldwide logistics arena. From the growing adoption of friendshoring to the strategic considerations surrounding nearshoring, it’s clear that enterprises are confronting unparalleled obstacles. Here at ARC Consulting, we remain dedicated to furnishing actionable tactics and indispensable counsel to empower our clientele in successfully maneuvering through these intricacies.”
Other Media Mentions:
Daniel Karlsson’s insights have also garnered attention in several other leading publications, including:
- Dagens Industri, Forecasts on Supply Chain Disruptions Amid Red Sea Crisis
- Omni, Expert: Svenska bolag vill flytta efter attackerna
- Realtid, Krisen i Röda havet gör att svenska företag överväger flytta produktion och inköp
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Anna Sahlberg Carlsson