Changing Chemical Markets and the Impact on European Supply Chains

A More Complex Chemical Supply Chain 

The obvious change that occurs is the greater distance from the origin to most end customers. As a result, time-in-transit can easily increase by one or two weeks based on the lane. This adds costs and lead times for shipping.  

Many companies are unprepared for the complexities and costs of importing goods back into Europe and what it takes to manage ocean transport. Delivery reliability can be much less certain, and transit delays are much more common. There is also greater competition for space on ships, making capacity harder to secure space in many lanes at peak times.  

A looming change that companies should be prepared for in 2025 is a realignment of the major ocean shipping alliances. Ocean importers should expect schedule reliability to further decrease as the carriers work out new sailing schedules — a process that could take months. Any per-shipment cost increases or a change to lead times will have a magnified effect on the supply chain. 

The impact of such a shift is felt in several other ways, too. 

• Since chemical shipments are often hazardous and/or regulated commodities, the international and fast-changing regulatory environment makes maintaining compliance challenging. 

• European companies sourcing in the Asia-Pacific face greater geopolitical risks than many other markets. This additional risk creates uncertainty and is a consideration for companies focused on building greater supply chain resiliency. Presently, potential new U.S. tariffs and the China/ Taiwan dispute create uncertainty for chemical companies operating in the region. 

• EU regulations aside, there is a negative impact on sustainability (already a very large concern for the industry) because shipping longer distances creates more emissions and burns more fuel, contradicting the CO2 reduction goals that many European companies are legally and morally bound to meet. 

• There can be concerns over Intellectual Property Rights (IPS). Sourcing from new countries exposes companies to additional risks of IPS theft and other unsuspected regulatory roadblocks. 

Embracing the Change 

The result of this trend is that European chemical companies are forced to create bigger and harder-to-manage supply chains. Success requires new approaches and solutions that should be centered on two things: technology and chemical market expertise. 

Technology is needed to support tactical decision-making while providing strategic insights that support better long-term planning and risk management. For example, real-time visibility tools enable shipment-level logistics management related to carrier selection, costs, and transit time. Bigger-picture planning and risk mitigation can be supported with AI to model complex global risk factors to help prevent the unexpected. Carbon-tracking software helps companies monitor emissions and adjust their logistics operations in real-time. 

Many companies are adapting to the evolving market by leveraging supply chain partners with chemical market expertise. Industry knowledge is invaluable to the process of creating more supply chain resiliency in the face of such change. The chemical marketplace requires companies to be discerning and focus on precision regarding technology and their logistics operations. New solutions to improve either must be flexible and adapt to business needs. In other words, out-of-the-box technology and relationships with partners that have no product experience fall short of meeting expectations. 

Although much of the change that comes with sourcing more in the Asia-Pacific region is about managing risk, a large part of the supply chain is still about moving products efficiently from point A to point B. Entering new markets is always easier and cost-efficient with partners who understand product requirements and have an established presence in the region. Helpful local knowledge can include determining which ports are easiest to work with for given types of chemicals because it is common within a given country for regulations to be unevenly applied.  

A combined approach of leveraging technology and expertise helps not only with the daily execution of shipping but also with the new regulatory requirements and navigating the inevitable compliance hurdles that will appear.