Supply chain optimisation key to mitigating high oil prices
Supply chain optimisation key to mitigating high oil prices
Amid soaring oil prices following unprecedented US sanctions against Russia, the global logistics industry faces significant challenges with rising fuel costs. However, this situation opens opportunities for Vietnam, a vital link in the global supply chain.
Supply chain optimisation solutions, such as the Logistics Industrial Cluster (LIC), claim to minimise costs and maintain a competitive edge for businesses, thereby enhancing Vietnam’s attractiveness as an investment destination.
The US Department of the Treasury announced extensive sanctions on January 10, targeting Russia's energy sector, including major oil companies such as Gazprom Neft and Surgutneftegaz. These measures aim to disrupt Moscow’s efforts in the conflict with Ukraine and strip Russia of billions of dollars in monthly oil export revenue.
Analysts predict these sanctions will significantly reduce Russia’s crude oil exports, forcing major importers like China and India to seek alternative supplies from the Middle East, Africa, and the Americas. This supply chain shift drives up global oil prices and increases logistics costs, particularly in maritime, land, and air transportation.
The sharp rise in fuel prices has directly affected businesses, compelling many to adjust product prices to offset costs, which negatively impacts consumer purchasing power. Additionally, escalating operating expenses represent a challenge for companies in managing their cash flow and maintaining stable operations.
The risk of supply chain disruptions looms large as businesses struggle to balance costs while meeting market demand. This diminishes competitiveness and poses a significant challenge to the sustainability of global business operations.
Vietnam, with its geographic advantage near critical shipping routes and a network of modern seaports, is emerging as an attractive destination for international companies seeking efficient production and logistics solutions to mitigate the impact of rising transportation costs. The government is actively implementing incentives and investing in modern infrastructure, from transportation systems to industrial and logistics infrastructure, to enhance competitiveness and attract foreign investment.
Given the challenges of rising oil prices and soaring logistics costs, optimising supply chain productivity and developing effective cost management strategies are top priorities for businesses to maintain their competitive edge and ensure stability in a volatile global environment.
Logistics Industrial Cluster: a solution for supply chain optimisation
The LIC is recognised as a comprehensive and effective solution to help businesses navigate current challenges.
Yen Lenh Industrial Cluster - An LIC initiative in Ha Nam |
With an integrated supply chain ecosystem, including factories, warehouses, transportation services, and high-quality infrastructure built to international standards, LICs optimise transportation distances and reduce logistics costs. The model fosters efficient supply chain connectivity, enabling close collaboration among partners and suppliers within the ecosystem to optimise resources and eliminate unnecessary expenses.
LIC projects are strategically located at key transportation hubs near seaports, airports, and major highways. This advantageous positioning enables businesses to streamline trade and reduce transit times.
Furthermore, aligned with environmental, social, and governance principles, LIC projects prioritise renewable energy applications and environmental protection measures. By minimising emissions and creating a green supply chain, the model saves long-term costs and meets global sustainability standards.
As the energy market impacts global logistics operations, Vietnam has a unique opportunity to assert its role in the global supply chain, engage investors, and drive sustainable economic development. The LIC ecosystem not only helps minimise operating costs and optimise efficiency, but also provides businesses with flexibility to adapt to global fluctuations, laying the foundation for long-term competitiveness and growth.
Explore about LIC ecosystem: www.westernpacific.com.vn
