The only certainty when it comes to global logistics is ongoing uncertainty. Agility, technology, and an appreciation for geopolitics are among the abilities essential to navigating the current environment.
C ross-border tensions,
be more difficult by summer 2024. “Companies will need to plan longer lead times for getting goods to their final destinations,” says Christa Pitts, co-CEO with The Lumistella Company, the firm behind Elf on the Shelf. CHINA PLUS ONE To offset rising labor and other costs in China, many companies are employing a “China + One” strategy. “Firms are reducing their concentration in China and adding capacity in Southeast Asia, India, and Mexico,” says Marc Gilbert, managing director and senior partner with BCG. Countries in Southeast Asia, for instance, currently supply multiple regions of the world, including China and North America, Gilbert says. In India, leadership has taken steps to address corruption and enhanced the country’s ability to move goods around, he adds.
Challenges in the Red Sea will even indirectly impact shippers whose cargo doesn’t travel this route, says Robin Knopf, global head of Sea-Air Logistics with Kuehne+Nagel. The reason? As carriers move to avoid the Red Sea, they create disruptions or container shortages along other routes, he adds. Other trade lanes are also at risk, says the Boston Consulting Group (BCG). One is the Strait of Hormuz, which accounts for 20 to 30% of oil trade. If Iran is drawn into the conflict in the Middle East, vessels navigating this strait could be at risk. Another lane, the Strait of Malaca, accounts for 30% of global trade. An ongoing dispute between China and several members of the Association of Southeast Asian Nations (ASEAN) over an area in the South China Sea may impact this strait, BCG says. Along with rising transit costs, it’s likely that confirming bookings will
environmental concerns, advancing technology, and
related worries about cybersecurity are among the forces shaping today’s global supply chain and logistics operations. Moreover, a return to normal—say, the years before the pandemic—appears unlikely. Every year lately, “a big unknown” has impacted supply chains, says Leo Qvarnström, director, Sea-Air Logistics and air sustainability, North America with Kuehne+Nagel, a provider of logistics services. Recent examples include the war in Ukraine, the ecommerce boom, and the current conflict in the Red Sea. The acronym VUCA, which has its roots in the military and stands for volatility, uncertainty, complexity, and ambiguity, is now being used to describe the world of commerce, says Tom Goldsby, executive director of the Global Supply Chain Institute at the University of Tennessee, Knoxville. Supply chain and logistics professionals can gain an edge by understanding the trends and shifts contributing to the current global logistics environment. GEOPOLITICAL UPHEAVAL In addition to exacting a human cost, conflict impacts supply chain and logistics operations. For instance, Red Sea attacks are forcing more shipments around the horn of Africa, lengthening cycle times and driving up fuel costs and carbon emissions, says Ted Stank, co-executive director, with Tom Goldsby, of the Global Supply Chain Institute. Between November 2023 and February 2024, container leasing rates on the China-to-U.S. trade route more than doubled, finds Container Xchange, an online container logistics platform.
A major gateway for global cargo shipments, the Oakland Seaport in Northern California serves a local market of more than 14.5 million consumers and 50% of the U.S. population by rail.
March 2024 • Inbound Logistics 35
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