Conflict in the Middle East forces Riopele to seek new routes

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The escalation of the conflict in the Middle East is affecting the activity of exporting companies. In the case of Riopele, which exports over 90% of its production to 50 markets, the entire logistics system has been reassessed, requiring a search for new maritime routes, prioritising the Cape of Good Hope over the Suez Canal.

Paulo Oliveira, Director of Riopele's Procurement Department, acknowledges that ‘the war between Israel and Hamas, followed by attacks on ships in the Suez Canal by the Houthi group, led major shipping companies to divert their normal route through the Red Sea to southern Africa, via the Cape of Good Hope,’ resulting in a direct increase in freight and transit time.

Additionally, Paulo Oliveira noted that ‘the bad weather and sea disruptions in the first quarter of this year led to the closure of some maritime ports. This circumstance forced ships destined for Sines to be rerouted to other ports like Le Havre.’ As a result, ‘Riopele is facing a new reality,’ with container transportation from Asia now taking 60 days instead of the usual 45.

‘Since we cannot directly influence maritime routes, what we have done is inform our partners of all the procedures,’ emphasised Paulo Oliveira. Additionally, Riopele has prioritised two reputable shipping companies, but ‘is naturally attentive to new developments.’

But Riopele's export activity was already being affected. ‘Since the beginning of the war in Ukraine, the transportation of goods to Eastern countries has decreased substantially,’ stated Miguel Teles, Riopele's Logistics Director. In terms of imports, ‘the transit time for raw materials has increased considerably, forcing us to rethink our procurement strategy by anticipating purchasing plans to minimise potential risks.’


Investment in a logistics centre

Throughout its 97-year history, Riopele has been constantly challenged to seek new logistical solutions and innovate in process execution. ‘The construction of a new Logistics Hub in 2021 brought all our logistics operations under one roof, maximising team and resource productivity, while streamlining work routines and resources,’ emphasised Miguel Teles, Riopele's Logistics Director. This upgrade ‘enhanced our storage conditions for the main materials used in fabric manufacturing, centralised stocks, and their organization, taking on transport management internally, selecting partners who ensure fast and reliable deliveries.’

The new logistics unit at Riopele operates across the entire value chain, ensuring all inbound operations (receiving all resources necessary for production), outbound operations (shipping of finished products), and supplying production units.

With the implementation of the integrated SAP R3 management system, we have improved the planning process by using tools such as MRP, ATP, and capacity management, thereby increasing the on-time delivery rate. Stock management, warehouse operations, sales, and distribution processes have also become more efficient and systematised. By outlining key performance indicators (KPIs) we are able to closely monitor performance in various areas, enabling timely decision-making when necessary.