Survey Tracks the Widespread Impact of Ukraine War for EMEA

March 27, 2023 • John Salustri

It should come as no surprise that the economic impacts of the Russia-Ukraine war are top of mind for industrial market professionals in Europe, the Middle East and Africa (EMEA). But the conflict isn’t a standalone event, and its tentacles reach far beyond the battlefront. And yet, there’s good news to be had.

As stated in a recent survey of more than 170 EMEA supply chain managers conducted by JLL and Reuters Events, the industrial market is at a point of “epochal change that dramatically shifts the landscape. This point of inflection has been precipitated by the crisis in Ukraine, which has challenged many long-held policy positions and economic assumptions.”

In fact, some 68% of the supply chain managers surveyed point to the war as their most widespread concern. 

Those epochal impacts of the war resonate throughout the market, directly or indirectly. For instance, the rising cost of fuel is the second most worrisome development of 2023 for 66% of respondents, while the reaction of consumers to inflationary pressures comes in third at 55%. Little wonder, since fully 81% of survey takers indicate that they would be passing their increased expenses onto their customers. 

“Our results suggest that costs will continue to work their way through supply chains in the coming year,” states the report, “with most companies having already reached the limit at which they are willing, or able, to eat increases in input costs, and instead they are looking to pass them on to customers.” That’s a bitter pill, promising to keep inflationary pressure above a three-decade norm throughout 2023. One dubious bright spot is that “the upwards pressure will not be as severe from supply chains this year as last.”

Of course, there are global implications to the inflationary issues, and 42% anticipate a global recession dampening all markets through the year. 

But there’s good news coming out of the survey as well.  While inflationary pressures will go on making their presence known, COVID issues continue to slip into the background, and post-pandemic normalization of port capacity is finally taking hold. Port issues remain a concern for only 18% of supply chain managers. 

In addition, despite the downward direction of the economic picture, there’s growth to be had, although manufacturers and retailers showed more optimism than did the logistics folks, and “42% of the former forecast growth, compared to 22% for the latter,” according to the survey report. The largest projected growth, however, will come from outside the EMEA region, where only 13% see substantial growth. That prize belongs to Asia-Pacific, with 42% of respondents expecting the greatest expansion to take place there. 

It's an old saw that innovation comes from adversity, but it’s one that plays out in EMEA. At work here is the crisis-based necessity of making work more efficient and productive. For one, despite the vagaries of war and economic strife, technology continues to grow apace. The top five expected technological applications for investment in 2023 are: 
Supply chain monitoring, tracking and visibility solutions: 68%;
Forecasting: 48%; 
Process automation: 47%; 
Facility automation and robotics: 37%; and 
Analytics: 37%.

Seventy-two percent of respondents plan on optimizing their transport networks while 51% are relocating their warehouses closer to transport hubs and end markets. Another 46% are looking at enhanced energy efficiency of their assets (with 63% focusing their energy efforts specifically on production and manufacturing process). Increasing the purchase of renewables is on deck for 43%.

Naturally, the prime issues underpinning the EMEA picture is how long the war is destined to continue and how it will continue to impact both the regional and global supply chain environment.  For that, we can only wait and see.
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