The biggest supply challenge we see in 2024 is the availability of electronics components. Additionally, the uncertainties brought by the geopolitical challenges and wars around the globe may create additional supply issues because of the unpredictable situations. We will mitigate risks in the supply chain by forecasting and communicating more frequently with customers and suppliers.
We expect the focus on stock reduction to continue during the beginning of 2024. We’ll make an effort to minimize capex expenditures and be ready for market volatility in case of economic headwinds, especially in Europe. Additionally alternative suppliers, located closer to the final manufacturing site, are validated and approved for supply.
Thermo King, as a brand of Trane Technologies, continues to help solve for some of the world’s biggest sustainability challenges and inspire a movement with bold 2030 Sustainability Commitments. These commitments include a pledge to reduce customer greenhouse gas emissions by one gigaton — 2% of the world’s annual emissions, the equivalent of the annual emissions of France, UK and Italy — through our products and solutions within heating, ventilation, air conditioning and refrigeration (HVAC&R) in buildings, processes and transport, through the increase of energy efficiency into the products lineup, and through a net zero emission path within our manufacturing sites.
Going forward, shippers need transportation providers to offer enhanced product traceability and more flexibility among modes of transport to keep a balance between components availability and the cost of logistics, which must significantly decrease in 2024. Using alternative modes via rail — i.e., the new Silkroad — is an example of how to reduce lead time. We understand as well that some shipping lines will reduce the number of ports between the Far East and Europe, thus reducing transport time. This involves a premium cost. Shipping lines have overcapacity and are challenged on profitability, so they still “slow steam.” New services could be a solution for the future.
Looking forward, we’ll keep a balanced view between short- and long term, and we anticipate more affordable logistics costs into 2024.