Wings flapping in Beijing can later be felt in Paris. Where it becomes a tsunami. This claim is all the more valid when speaking about the customisable products market, notoriously characterised by a very long supply chain in which the manufacturer is almost always situated on the other side of the planet, typically in China, relative to importers, distributors, retailers and end customers, located in the West. The weak link in this intercontinental chain is the movement of goods, as was seen last March when supplies were blocked by the container ship Ever Given, which ran aground for 6 days in the Suez Canal.

This was demonstrated by the pandemic, during the peak of which (in the first half of 2020) thousands and thousands of containers piled up at one end of the chain, i.e., in Chinese terminals, while in the major European port hubs, the docks became home to entire fleets of empty ships with no goods to transport. Then, when people and products started moving again, the surge in demand was not met with an adequate supply of ships and containers, resulting in delays (as of September 2021, only 35% of containers arrived on time, compared to 85% recorded in 2019) and rising prices, often staggering, up to over 60% in some cases.

This economic climate has a significant impact on the promotional sector, which is closely linked to the toys sector, in which importers and retailers have to work hard to avoid the risk of ending up with empty warehouses at Christmas, (“even though, paradoxically, the effects of the pandemic, together with shrewd stock redistribution, have made it possible to face the impasse more clearly”, says Vittorio Turla, country manager of Paul Stricker Italia. The reason ship logistics has not kept up with the foreseeable increase in demand is partly due to the fact that, in 2020, several ship owners decided to take advantage of the hiatus enforced due to Covid-19 in order to plan extraordinary ship maintenance. There are also rumours among freighters that shipping companies have been “colluding” to raise prices in order to recoup what they lost due to the reduction in volumes handled.

“The fact that shipping companies even stopped ships with loading capacities of 20,000 containers has resulted in, several months after production resumed, not yet being able to rebalance the cycles of transoceanic ships, so there is a profound lack of space on those few that have resumed”, is how Stefano Di Saverio, CEO of Silicon sums up the situation, adding: “This factor has caused freighting costs to rise exponentially, from $1,800/2,200 pre-pandemic, on a route like Shanghai-Genoa, to $15,000/16,000. This has clearly had a major impact on product prices”.

Further complicating the situation is the fact that demand from Western importers and customers is for both finished products and raw materials.

The prices of raw materials in particular have recently been both soaring and fluctuating, which could undermine the import mechanism as goods often become more expensive on their way to Europe than when they left the People's Republic of China's ports, which, incidentally, had the opportunity to buy commodities in advance (cellulose, to name just one) and other strategic reserves, its economy having recovered ahead of other countries still smarting from the pandemic. A complex but largely predictable scenario: Daniele Tirelli, lecturer in International Economics at the University of Modena-Reggio, observes: “China is a country that obviously seeks out what it needs to produce, which the western world then imports. It is therefore not surprising that aluminium has risen by 50% and copper is about to hit all-time highs, reflecting the general trend whereby the prices of strategic raw materials, from molybdenum to oil, from ferrite to canola, are climbing”.

Besides hoping that balance between supply and demand will be restored as soon as possible, is it possible to find, or at least consider, alternative solutions? Some industrial companies have long since dumped global for local, rediscovering made-in-Italy and traditional production areas, compromising between the clever strategic move to drastically shorten the supply chain and a genuine concern for the local area and issues of social and environmental sustainability. “I do believe, however, that systematically bringing production back to Europe is an operation that is neither easy nor feasible over a short period of time”, comments Stefano Di Saverio, dampening any enthusiasm with a healthy dose of realism.

In terms of the environment, it is worth remembering that the means of transporting goods with the lowest CO2 footprint is rail (according to Eurostat data from 2017, 86.5% of goods travelled by road to Italy, 76.4% to Europe), which is, moreover, twice as fast as maritime transport and less expensive than air transport. Considering a very recent survey by Open Text, according to which 93% of Italians surveyed prefer to buy from companies that could demonstrate they have implemented ethical procurement strategies, i.e., attentive to environmental sustainability and social responsibility issues, the China-Italy freight train could be much more than just a working hypothesis in the future. Combating the problems linked to the shortage of raw materials requires a real paradigm shift (attitudes of politicians and younger generations will be key to this) in order to steer production increasingly towards circular economy protocols. Italy, which has always been forced to make a virtue out of necessity due to the shortage of raw materials and is not by chance the EU champion of virtuosity in waste recycling, could play a key role in this battle to exploit "secondary raw materials”.

Finally, making insurance companies more aware of the problems that afflict transoceanic chains would be welcome: the cargo policies currently available cover the possibility of losses caused by accidents and natural disasters, but do not include compensation for other unforeseen supply chain and logistics events, which were typical during this crisis period. This cover is definitely something the entire industry would like and could help ensure that future orders are dealt with more calmly.