The energy crisis caused by the global unstable geopolitical situation is now a reality. Against the backdrop of the war in Ukraine, disruptions in oil and gas distribution, exacerbated by sanctions and supply-restrictive measures by OPEC+, have caused chaos in energy flows worldwide.
The European Union is trying to find new sources of supply and counter inflation. This is hugely important, as European countries were heavily dependent on Russian energy. According to Forbes magazine, before the outbreak of the conflict in Ukraine, EU countries collectively imported 27% of their oil and 40% of their natural gas from Russia. Sanctions imposed on Russian energy and a nearly 90% cut on oil consumption caused a significant upheaval in the global energy market.
In such an unstable situation associated with a lack of resources in the form of the necessary amount of gas, coal and other raw materials, energy costs have risen dramatically.
Impact of energy crisis on supply chains
Increased electricity consumption along with transformed power systems, and power outages can lead to a prolonged blackout, a complete loss of power in an area. This disruption can have dire consequences for manufacturing, logistics and retail. In contrast, a recent report by Business Insights from the Office for National Statistics (ONS) highlights the role of the impact of high energy prices on the economy.
"More than 28.2% of transportation and warehousing companies identified rising energy prices as the main reason for increased operating costs, and more than 56% of companies are already incurring higher costs due to the current energy crisis."
Rising energy prices in Western Europe are a significant driver of the volatile situation facing manufacturing and logistics companies.
Sustainable supply chains are a must
Energy security is becoming increasingly important. Warehouses and logistics operations can be very energy intensive due to the heating or cooling requirements of large buildings, equipment, and transportation costs associated with freight and fleets.
Therefore, rising energy costs should prompt logistics service providers to turn to more sustainable supply chain solutions, such as green on-site energy generation, storage and the search for closer service and product providers (nearshoring).
But before such a fundamental transformation takes place, logistics companies can achieve their goals by focusing on using more sustainable solutions that absorb some of the costs. When energy resources are in short supply and companies are threatened by possible blackouts, there is a need to use energy resources even more rationally to become more resilient in the face of shortages. It applies, for example, to the production of logistics packaging, which is becoming increasingly expensive due to inflation but is an essential link in supply chains. It is worth focusing on alternative packaging uses so that instead of producing new packaging, you use the ones already in circulation.
Rental packaging as a way to save costs
When energy prices are rising virtually overnight, investing in the purchase of new packaging can become a major financial effort. Therefore, a favourable option that many companies are already using is switching to various forms of sustainable packaging. These include pooling, packaging recovery, or rental, among others.
With a focus on rental, the main advantage of this service is that logistics tasks can be accomplished without significant capital investment or the creation and financing of complex infrastructure. It is a way to focus on business development and save funds for other capital expenditures and assets instead of purchasing packaging.
Packaging rental also means optimizing storage space and saving on storage costs. At a time when the maintenance and upkeep of packaging consume enormous energy resources, renting relieves companies of such obligations. Once the project is completed, these media do not need to be stored but returned to the supplier.
This extends the life cycle of products and thus reduces the amount of energy needed for production. Today, reusable packaging is becoming a standard so that instead of incurring costs to purchase more new media, you can use robust packaging that works intensively in circulation.
Why is package rental a sustainable solution?
- Releases capital needed for other investments
- Saves on storage costs
- Reduces the amount of energy needed for production
Sustainable logistics services are a priority in disruption time
Flexible resource management with packaging rentals is becoming necessary when logistics disruptions, if only those resulting from rising energy costs, have a decisive impact on a company's profitability.
Therefore, if possible, we encourage companies to use returnable packaging that can be reused. This reduces the amount of packaging a company has to purchase, which translates into savings of resources. Moreover, it will reduce environmental costs because it doesn't require using energy resources for production, reducing the amount of waste generated.
If you're interested in a way to take a flexible approach to packaging logistics disruption, we're ready to help. Talk to us, and we'll be happy to take the time to assess your supply chain to identify key drivers of excess costs. In doing so, we'll develop an action plan to help your company achieve maximum efficiency, saving you money and increasing profits.
