The Impact of European War on the Supply Chain: What it Teaches us About Resilience and Disaster

Over the last few months, we have seen the issues that the ongoing war between Russia and Ukraine has caused for global supply chains. 

There have already been some serious short-term implications. Yet as it becomes clearer that the war is likely to last even more months and possibly years, and that Russia has severed many of its economic ties with the West - at least for now - the longer-term outcomes for global supply chains are becoming apparent.

The war is clearly a tragedy for everyone involved. Personally, I am the Ukrainian CEO of a Berlin-based startup, who has already taken time out to ensure that my family has safely left the country and to help my fellow Ukrainians. Yet I run a technology business whose main product has been designed to improve safety and efficiency in the supply chain. 

The war has once again made me ask questions about the resilience of the supply chain and how my startup can help solve those problems that will emerge in the future.

Resource issues

The main problems facing the West are around resources. Russia and Ukraine between them are huge providers of key resources like natural gas, oil and wheat. And this has had a big impact on global prices. 

Ukraine also produces 90% of the semiconductor-grade neon used in the United States, while Russia provides the US with more than a third of its palladium - a rare metal that’s a key component of semiconductors.

Away from the materials the war is also significantly slowing down the movement of goods. The closing of air space in the region means that goods moving from China to Europe or the US may need to be rerouted or use slower or more expensive modes of transportation. Factor into this too the number of goods that are now holed up in ports as authorities try to work out how the sanctions against Russia impact on the movements of their goods. 

End-to-End tracking of supplies is key

In the short term, there clearly is chaos in the way that goods and supplies are moving across Europe. In recent years technology has enabled logistics providers to add trackers to transported goods, which deliver ongoing information as to their passage. 

Here is how this works in more conventional times. Express delivery tracking typically relies on a proprietary network of checkpoints and back-end systems: inbound and outbound scanners at the warehouses and sorting centres, GPS trackers on delivery vehicles, and air freight schedules. This system works well when one can assume these checkpoints are operational and there is normal working infrastructure. Typically this is all under the control of the one company. 

Currently, due to massive infrastructure disruption, the majority of goods inside Ukraine are being transported in a loosely defined network that makes tracking anything almost impossible. It includes everyone from commercial shipping companies and volunteers with cars who deliver goods from either the Moldova/Ukraine border or the Poland/Ukraine border to the final destination. 

There are no barcode scanners, no ‘normal’ working infrastructure, and few (if any) defined processes. Fortunately, Ukrainians are very good at achieving results in a highly chaotic environment, but this isn’t sustainable long-term.

Another challenge is what actually happens to the goods when they finally reach Ukraine. Simply tracking them, to ensure their arrival, is virtually impossible. Upon arrival in Lviv, for example, the initial shipping container may be separated into boxed shipments destined for secondary destinations (such as Kyiv or Vinnica), and from there, individual boxes are delivered to hospitals or civil defence groups. 

So how can the goods be tracked? The default in conventional times is non-disposable GPS trackers. These deliver basic information such as location etc to the logistics company. The key problem for these generally - and this is even more exacerbated in the current situation - is their high cost. What makes them totally unsuitable for use in Ukraine is that they rely on the recipient to return them, which is a massive bind at any time, and virtually impossible at the current time.

The solution we worked on and launched a year ago is a disposable tracker. We wanted a tracker that could give information such as location (like every 4-6 hours), temperature, humidity (5-minute intervals), vibration shocks and more, yet didn’t need to be returned, rather just recycled by the recipient. Crucially, the implementation of Moeсo trackers does not require a lot of time and staff training. 

Initially, this innovation was designed to take logistics tracking to a new level, but as is obvious it is ideally suited to help logistics companies as they face the new issues caused by the Russia-Ukraine conflict. It is, for example, possible to track not only the direct supply of medicines to Lviv, but also further distribution by city too.

Pallet/package level conditions monitoring and visibility is in high demand and obviously not just in the war zone. It reduces dependency on human work and critical infrastructure, and scales quickly. In other words, you don’t need to hire more people as the shipping volumes go up. 

We think that “self-talking” cargo is the way we can solve not only the humanitarian crisis in Ukraine but also to remove logistics bottlenecks in the supply chain around the world.

What does the future look like for supply chains?

The way forward for Russia, Ukraine, and indeed the entire world is not clear. In many ways, the conflict has underlined the resilience of the supply chain in that global trade traffic as a whole hasn’t been too badly disrupted. Further goods that have been bound for Ukraine have, sometimes against the odds, found a way through.

I think ultimately the conflict will mean that the world looks again at supply chains: How efficient are they? How can we improve them? And how we can ensure the minimum disruption if a similar conflict occurs.

I am a great believer in the way that people come together and harness technology to solve problems. And that is what I think we are going to see in the coming months and years with the supply chain.