If 2024 taught us anything, it’s how small the world is. This year, Dolphin Bay was again confronted by the complexities of a global economy that substantially tested our logistics.
In a world where the buzzword is AI and how it will shape business in the future, we’ve almost forgotten how we once only talked about the forces of globalisation. Nonetheless, we continue to adjust to it, as fluctuations and disruptions in the global supply chain are a constant challenge.
In June, the trade imbalances between Europe and East Asia, combined with the ripple effect of attacks on vessels in the Red Sea, made congestion at Singapore’s container port worse than it’s been since the Covid-19 pandemic.
In mid-June, 60% of all the ships in the world waiting at anchor were stuck in Asia, with a total of over 2.4 million, 20-foot equivalent container units stuck at anchorages. Most of Dolphin Bay’s raw materials come from the Far East, where ports were suddenly congested because of the vessels that had been re-routed from Singapore.
Limited supply and high demand meant that shipping lines shifted their East African vessels to the far more profitable routes in the Far East. We went from having once-a-week sailings from South African ports to sailing only once a month, simply because the capacity wasn’t available.
Shipping lines that used to commit to a rate for the entire year are now giving us spot prices on every booking.
All of this left us sitting in South Africa, unable to send stock to East Africa because of trade issues between China and Europe. That’s how small our world has become.
Harbour undercurrents
It didn’t help that there were also delays in South Africa – but here we had a problem with the weather. Ngqura harbour had extremely strong undercurrents this winter. That was a new challenge, and another that we couldn’t have foreseen.
But through strategic planning, proactive risk management, and a focus on strengthening our supply chain relationships, Dolphin Bay was able to mitigate the impact of external disruptions and ensure that our customers continued to receive high-quality timber preservatives without any major interruptions. Our agility in adjusting to the changing economic and environmental conditions has been a key factor in ensuring that we maintain a competitive edge.
All of that left us sitting in South Africa, unable to send stock to East Africa because of trade issues between China and Europe. That’s how small our world has become.
Optimisation – both forced and chosen
Our prices for raw materials are also under pressure due to escalating energy costs on the other side of the world – a pressure that’s far greater than the tariff increase that the National Energy Regulator of South Africa (NERSA) wants in South Africa.
This is another example of how deeply exposed we are to global economic risks. We import a lot of our raw materials from the Far East, where producers use gas to power their production processes. This year, it became far more profitable for gas companies there to export their gas rather than sell it locally, due to the effects of the war in Ukraine.
At Dolphin Bay, meanwhile, we saw the benefits of initiatives that – while being quite capital-intensive up-front – aimed at optimising our operations.
One of those was solar power. Loadshedding forced us to install solar panels at our factories in both Mossel Bay and Sabie. We had no choice there. In hindsight, it’s proven to be a huge benefit to our business. Both factories are generating almost enough to cover our electricity needs (Sabie has also gone off-grid for water), and our investment in solar is set to be paid off much quicker than we had initially expected.
Our other major operational initiative was automation. That wasn’t forced on us but was another significant capital investment that, with the benefit of hindsight, now looks like a complete no-brainer. Our processes are much more controlled now, and we are able to measure every element and every tank down to the gram. We are now producing CCA with even greater precision and consistency.
It’s hard to measure this, but we’ve clearly seen that the clients whom we work with in a constructive spirit of collaboration are typically the ones that are more successful, too. It’s a win-win for both sides.
The importance of collaboration
It’s been interesting to see how quickly business confidence returned in South Africa after the elections. In July, the South African Chamber of Commerce and Industry’s Business Confidence Index hit a four-month high of 109.1, and by the third quarter, the RMB/BER BCI was up to levels we hadn’t seen since early 2022. By November, American ratings agency S&P Global had revised South Africa’s outlook from stable to positive.
We’re seeing that positive sentiment among our South African clients, too. When we compare the situation that we were in last year to the mood this year, it’s clear that the Government of National Unity (GNU) has reassured many in South Africa – and beyond.
The Government of National Unity’s (GNU’s) collaborative spirit seems to have spilled over into our industry as well. We’re seeing a lot more intentional collaboration, with industry members working together to address pressing issues.
It’s hard to measure this, but we’ve clearly seen that the clients whom we work with in a constructive spirit of collaboration are typically the ones that are more successful. It’s a win-win for both sides. You do still get people who have a win-at-all-costs approach, and we’ve had some clients with that attitude in the past, but those businesses seldom do as well.
From Dolphin Bay’s perspective, our customer-centric philosophy has been more important than ever as we collaborate with clients to understand their needs and deliver tailored solutions. For the sake of the sustainability of our industry, Dolphin Bay and our clients need to work together towards shared success.
That’s the big take-out from 2024. It’s a small world, and we all need to work together if we’re going to succeed. The lessons learned this year have reinforced my belief in the importance of collaboration, sustainability, and adaptability.
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