The view from my desk is that of the rolling green hills of Yorkshire. Sitting here, looking at the first buds of spring, you’d think it would be easy to forget the rest of the world exists. But it’s not, not working in graphite. There are always reminders of how global our market is; the shipping quotes I’ve been receiving are the latest.
We import and export to countries all over the world. It won’t come as any surprise that recently shipping costs have increased. This comes at the same time as scheduling reliability has reduced.
Sadly, the reasons for this are documented daily in most news bulletins. Local military conflicts, global geopolitical tensions, and ailing economic health all impact the ability of shipping lines to operate efficiently.
While a passenger in a luxury cruise liner might not complain about the additional time needed to cruise around Africa to avoid the unrest in the Red Sea, they might protest if asked to pay the extra costs of the detour. Freight customers have no choice on either factor, impacting margins and delivery timescales.
Supply chain risk isn’t new in the graphite market, but it has certainly been more of a factor in the last four years. First COVID-19 then global tensions made supply chains riskier.
I was reflecting about this over dinner with an old American friend at GIFA* last June. He’s a wonderful engineer; a delightful hybrid of old school values and passion for innovation. He also enjoys pigs trotters with sauerkraut, but each to their own.
He pointed out that this situation was exacerbated by the structure of the graphite market, which is now unrecognisable to the one we joined as young, hopeful engineers. Structural changes over the years have resulted in fewer manufacturers with a higher geographical concentration, bringing their own risks. Market evolution hasn’t alleviated supply chain risk but worsened it.
He told me he didn’t worry about these risks too much in his graphite business. Every critical component had at least three suppliers, which were all used to ensure they were active. All their suppliers are assessed for the geopolitical situation of their location, and their shipping routes analysed.
There was a pause in the conversation as he pushed the remnants of a trotter across his plate.
Continuing, he was adamant that his approach saved his company money, as well as de-risking his supply. Having multiple suppliers created an element of price competition, different geographical supply locations gave options in shipping routes, and multiple sources resulted in a more stable, predictable supply.
He was rather pleased with himself as, much to my relief, he ordered apple strudel and vanilla ice cream for dessert; after all we were in Dusseldorf.
Recently, I’ve been thinking about that conversation quite a bit. Since the conference we’ve got a number of new clients from the UK, Europe, and North America for exactly those reasons. My friend’s logic may be correct but I continue to draw the line at eating pigs trotters and sauerkraut.
That’s it for now, see you next time.
David Coidan
*Giesserei Internationale Fachmesse – a four yearly metal/foundry industry trade show