What new shifts are emerging in the supply chain?

As shale gas and fracking come to England, what shifts will they bring to local and international supply chains?

The shale boom in the US has affected its logistics sector dramatically. As these technologies are effects on supply chain and logisticsset to change things in the UK very shortly, we can learn a lot by studying how things have changed there.

The shale boom in the US is well established, and its supply chain managers and other transportation industry professionals have adopted innovative strategies to cope with the changes and disruptions it has caused. England is sitting on a not inconsiderable amount of gas shale as well. While the best ways to exploit this research are hotly debated, few still doubt that it will be exploited one way or another, and England’s energy and transportation industries will be forever changed.

The question is, how can the logistics and transportation sectors in the UK prepare for the inevitable disruptions, and take best advantages of the opportunities that will surely arise?

The most obvious level is in the actual logistics of extracting the gas and bringing it to market, but that has already been dealt with extensively, and those who expect to be affected at this stage already have (or really should have) plans in place.

The next level is how the entire transportation and logistics sector will have to make new cost and efficiency models for their operations once fracking and extraction operations are in place, and changing the energy markets themselves. The high-tech industry will gain a s much of a boost from gas shale extraction as they are doing from the wind farm boom today. There will be a domino-effect of increased production and movement of all the goods in those supply chains, which will affect any supply chain manager’s predictions for costs and expected volumes in just a few years’ time.

Next is the fact that a new and local source of abundant, inexpensive energy will affect all industries in the UK, shortening energy supply lines dramatically, especially when the gas supplies in certain threatened CIS member states are beginning to look even more unreliable than usual. Shorter supply lines mean cheaper and more reliable energy. Gas that only gets taxed by one country means cheaper energy. Cheaper energy means more goods produced, moved, and bought nationwide.

Transport will be in more demand, just as fuel prices will drop (or more likely raise slower than expected) and new EU regulations will likely be forcing the purchase of new lorry fleets. Prices will be chaotic. Anyone in the transportation or logistics industries will need to think very hard about their niche in the next ten years, and they had better start preparing for change now.

 

 


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