When Supply Chains Shake: IGSC Weighs In on Industry Resilience
The global plastics industry is currently facing a period of extreme volatility. With the effective closure of the Strait of Hormuz and major shipping delays, the stability of the plastics industry is under significant pressure.
On 12 March, Prof. Pervaiz Ahmed from IGSC - Sunway Institute for Global Strategy and Competitiveness joined an expert panel hosted by the Malaysian Plastics Manufacturers Association (MPMA). The session, “Geopolitical Storms & Supply Security,” discussed what these disruptions meant for Malaysian manufacturers and how to navigate them and thrive despite these external shocks.
These regional realities include:
- Feedstock Shortages: Over half of Asia’s naphtha feedstock comes from the Middle East. Recent force majeure declarations by regional cracking giants in Singapore and Thailand, thereby tightening the supply of plastic resins.
- Logistics Costs: Soaring oil prices, shipping disruptions, and war-risk insurance rates are expected to drive up freight charges, and subsequently, drive domestic prices or squeeze already thin margins.
Against this backdrop of challenges unfolding, there is a need to nurture supply chain resilience and develop pathways to the future. Two possible pathways are:
- Regional Collaboration: No single company or country can manage these shocks alone. Strengthening ASEAN-wide cooperation is vital to securing feedstock access and stabilising prices.
- Sustainability as a Resilience Hedge: Recycled plastics and bio-based feedstocks are now strategic hedges against supply shocks and geopolitical instability in the oil and gas markets.
We thank Eddie Fong for moderating this session and fellow panellists Alvin Ang and Avdo Niksic - Nick for sharing their insights. As always, special thanks to Sujata Albert from MPMA for bringing together this timely event.
