Port-related Conflict at Port of Gothenburg- Consequences from a Fashion Retailer’s Perspective

Abstract

Risk management of supply chains has received increasing attention from researchers, as disruptive events have become more challenging to manage. The 2016 port conflict at the major logistics hub in Scandinavia, Port of Gothenburg, caused severe consequences for companies operating in the region. Among the industries impacted by the port conflict, the fashion retail industry can be viewed as more vulnerable to supply chain disruption, owing to specific characteristics such as short product life-cycles and volatile demand. This paper aims to investigate the effects of the conflict in Port of Gothenburg from the perspective of retailers in the fashion industry, and how they managed the disruption. Four different companies within the fashion retail industry were analysed together with a contrasting case having a different transportation set-up, by the means of semi-structured interviews with key stakeholders. The findings indicate that the studied companies have experienced substantial consequences, in which disruption in transportation and increased logistics cost are the most prominent. Within the increased cost, transportation cost was estimated to occupy between 15% and 70%, depending on companies’ different solutions to the port conflict. A calculation given a company with 500 TEU during a 3-month port disruption reveals that the loss may range from 750.000 SEK to 3.500.000 SEK. Although the companies conduct risk assessments, little attention has been paid to the mitigation of high impact/low frequent events like port conflicts. Instead, prevailing solutions were preferred and considered to be adequate in dealing with the disruption. Additionally, few alterations in the risk management strategies have been made after the port event. Taking into consideration of the negative effects faced by the companies during the investigated period, if any disruption would occur again for a longer period of time, the companies may face even more severe consequences and bear higher costs.