Winter is coming – the energy crisis in Europe

As autumn begins its trek across the European continent, the looming energy crisis is fast approaching the continent’s inhabitants and businesses. With energy saving measures already being put in place and doubts that gas supplies will last the cold season, worries are rising as temperatures are falling.

Supply chains feeling the squeeze

According to think-tanks, through a 15% reduction in current consumption and a pivot to the use of alternative sources of gas, plus alternative power sources like nuclear and coal, Europe should be able to survive the coming cold season. But it’s not going to be a walk in the park.

Energy saving measures are already affecting civilians and businesses, especially those that are energy intensive. Across the continent, companies are having to change the way they work, some even needing to slow production or furlough a portion of their employees.

Industries that are reliant on gas and electricity to transform raw materials into other products, such as paper, fertilizer, glass, and metals, are feeling the pinch. With initiatives to lower usage and higher prices, the effects are already noticeable. Hakle, one of Germany’s key producers of toilet paper, has had to file for bankruptcy due to the energy crisis, and according to Eurometaux, Europe’s metal trade association, half of Europe’s aluminium and zinc production have been taken offline.

An EIU analysis of the current energy situation predicts that further rationing is to be expected, with some countries in Europe likely being unable to meet their energy needs this winter. Germany, in particular, may be forced to implement industrial rationing, something that is causing worry amongst industry players and experts alike.

Recently, many European countries have announced energy saving campaigns to encourage the public to reduce power consumption during the winter. In Denmark, an idea of shutting down power for two hours daily was put forth by politicians, whilst the EU is in talks with Norway to lower cost of gas to bring some relief to prices overall. In line with rising costs and lowered access, resilience in businesses and supply chains has become an area that most companies are finding more relevant than ever before.

Finding resilience in a time of turmoil

Whilst experts point out that the energy crisis will be resolved eventually, it is undeniable that it will most likely last some time. And that that will have repercussions for industries and businesses alike.

There are some actions companies can take immediately that can bring more stability and resilience to their overall supply chains. Companies should assess the risk of their facility’s energy supply reliability, such as whether the country where the facility is located, is at high risk of inconsistent power supply and/or gas, coal and other fossil fuels for their overall heating and electricity in general, as well as if the company has high heating and electricity needs overall.

Any outages that can or will impact business continuity should be communicated as per companies’ disruption reporting processes. Monitoring of cost implications should also be put in place, so surging utility fees are watched for and when necessary, production can be halted to avoid brunt of heightened costs. Business functions should educate themselves on their critical 3rd party suppliers and make sure that they have alternative solutions in place as well in case of outages.

Additionally, companies should review their energy consumption overall, to pinpoint areas where they can save or reduce their energy uses. Though energy rationing may be imminent, either through voluntary or governmentally sanctioned actions, companies are best served having contingency plans in place prior to the action needing to take place.

Working with logistics partners can help ensure that companies can move their surplus supply and stock to areas where there are sales opportunities. Warehousing opportunities for areas where there are uptakes in sales trends can also be monitored, so that companies can work with their integrated end-to-end supply chain partners to seize new or re-established markets when they appear.

Finding resilience ahead

No one can predict the future, but companies can implement long term actions that can add more stability, should the energy market continue to fluctuate in price and availability. Companies can consider looking into utilising more renewable energy, such as installing solar panels, and supporting the implementation of more renewable energy solutions, such as wind power. Working with a logistics partner who has implemented alternative solutions as part of their offering, as well as implemented more streamlined solutions like automated warehouses that have energy saving abilities, can ensure that transportation, warehousing, and delivery are not as disrupted by spiking costs and lowered access to fuel.

An integrated end-to-end logistics partner will have more overview and visibility of developments and markets and will be able to alert companies to changing trends in fuel and energy sourcing and usage. Whilst there is no crystal ball of the future, partnership can make the cold winter a little easier to overcome, together.