Greece Faces Supply Chain Disruptions as Crisis Deepens
Greece’s debt crisis could disrupt imports and exports as a temporary bank shutdown potential euro exit unnerve trade partners
Container ships sit on the dockside in the COSCO Pacific Ltd. terminal at Piraeus port in Athens, Greece. PHOTO: BLOOMBERG NEWS
Greece’s supply chain is in trouble.
Supply chain experts say that Greek importers and exporters could be affected as soon as this week by the country’s decision over the weekend to shut down its banking system for at least seven days as it seeks to prevent money from flooding out of the country.
That decision will have an immediate impact on local Greek companies’ access to capital and ability to get supplies, which could ripple out through regional and global supply chains over the next few weeks or months, the experts said.
And if the latest crisis drags on, it could jeopardize regional distribution networks and eventually prompt export partners to look elsewhere.
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“Right now you can bet that there are lots of European companies that are reassessing: what does it mean to be doing business with Greek companies,” said Greg Johnsen, chief marketing officer at GT Nexus, a supply chain technology firm.
In the meantime, global delivery companies on Monday said for them it’s largely business as usual in the country. United Parcel Service Inc., Deutsche Post AG’s DHL and TNT Express NV confirmed they are operating normal services in the country and said they are monitoring the situation for changes.
Germany-based DHL put measures in place to ensure stable operations in Greece, including asking employees to fill up vehicles regularly in case of a fuel shortage, as well as monitoring credit terms for customs duties that must be paid on inbound shipments.
“Since we operate in 220 countries and territories, it’s part of our daily business to deal with economic and political crises or other relevant market developments,” a DHL spokeswoman added. She said the company didn’t expect the events to result in any financial risk or material impact.
Modern supply chains can shift rapidly in response to crisis. During a months-long West Coast port slowdown in the U.S. earlier this year, cargo was rerouted to the East Coast.
A prolonged crisis could result in a similar shift away from products currently exported from Greece, said Michael Bourlakis, a professor of logistics and supply chain management at the U.K.’s Cranfield University School of Management. Agricultural and other specialized products from Greece could be sourced from nearby countries like Turkey instead, he said.
Greece’s role as a regional transportation hub, with major ports and airports used for distribution, could also be jeopardized, he said.
In the short term, Greek companies face capital shortages as banks remain closed this week, the logistics experts said. That could limit their ability to import necessities, including food, as well as hurt their value as an export partner.
Still, in the case of countries dependent on Greek exports, “you can’t just disconnect overnight. You have to have back-up plans,” Mr. Johnsen added. “I think it’s unlikely that you’d see an immediate shift within weeks, but I’d say you could begin to see some of these changes within months.”
The impact on Greek’s supply chain will be determined by the outcome of Sunday’s referendum on whether the country should accept measures its creditors demand in return for bailout aid. A yes could mean a quick return to business as usual, Mr. Bourlakis said.
“If it’s a no, then we’re looking for some serious impact to the Greek economy, the Greek supply chain and the rest of the regional supply chain,” Mr. Bourlakis added.
