Geopolitics Hits Supply Chains
Companies that rejiggered their supply chain strategies following the global pandemic are putting those new plans to the test quite rapidly, The Wall Street Journal (subscription) reports.
What’s going on: Disruptions at two critical trade gateways—the Suez and Panama canals—and “growing geopolitical tensions” are hammering supply chains for a wide swath of goods, spurring businesses “to act in a fast-changing manufacturing and shipping environment.”
- Wars in the Middle East and Ukraine are jeopardizing the transport of oil, grains and consumer goods and complicating supply chains.
What it means: “The sudden shocks and shifts will pose a challenge this year to ocean carriers, truckers and other freight and logistics companies that will have to divert resources according to diversions in cargo flows and swings in demand.”
Success nonetheless: Many companies had good holiday seasons, however, with U.S. sales up 3.1% in 2023 from 2022.
- Retailers have also had success clearing out their pandemic-era inventory stockpiles.
Shifting flows: “Global trade flows are shifting as importers increasingly look away from China, the world’s chief supplier of goods, to alternative suppliers in countries such as Vietnam, India and Mexico.”
- Alternate ocean carrier routes—the result of disruptions on crucial waterways worldwide—are adding weeks to transit times, and West Coast ports are being called on to handle more of the worldwide container trade into the U.S.
Facilitating U.S.–Mexico trade: Supply chain snarls have occurred in recent months between the U.S. and Mexico, too.
- As U.S. Customs and Border Protection has at times shifted personnel from processing rail and cargo shipments at ports of entry to processing migrants, border backlogs have mounted, threatening manufacturing operations.
The NAM says: “The NAM continues to advocate for solutions that protect U.S. national security interests while enabling the facilitation of legitimate trade between the U.S. and Mexico, our largest trading partner,” said NAM Director of Trade Facilitation Policy Ali Aafedt.