Global Supply Chain Review: October

Global Supply Chain Review: October

Politics may not be “as usual” these days, but what can be relied upon is its impact on global supply chain. Here, the top stories from around the world that shaped this month…

 

U.S.: As tensions escalate between the States and North Korea, US importers have seen definite benefits. Despite utilization of containers from Asia being up, costs are going down. Experts suggest that “Carriers’ lack of success in raising freight rates when the supply-demand balance has been in their favor implies that a sort of cold rate war is occurring, one where lines avoid heavy discounting but instead are prepared to eschew rate increases to maintain market share as long as rates are profitable.”

 

U.K.: In the wake of 2017’s numerous cybersecurity breaches, the UK is seeking to improve its related supply chain and infrastructure. This is certainly not a new project, as the Defense Ministry initiated it half a decade ago, as “Defense Cyber Protection Partnership (DCPP) to specifically address issues around supply-chain vulnerabilities.” But amped up efforts, and work to develop and adapt new methods for identifying and sealing off security gaps points to what will likely be a largely trend – and need – in 2018.

 

EU: Spain and Catalonia dominate what has been a busy time across the EU. With the vote for Catalan independence, and Spain’s declaration of unconstitutionality, strikes and protests have already begun causing logistical complications. If Catalonia positions itself outside of Spain, it thus separates itself from the EU – altering its ability to trade, to bank, or to access the Euro. If Spain succeeds at blocking the civil division, however, union strikes and protests will continue disrupting supply chains, including individual and freight travel.

 

Middle East: Regional instability related to ISIS conflicts and an influx of refugees have caused a “fear premium” into the crude market—affecting global oil prices and the status of OPEC. Geopolitical strife and restraints on OPEC’s production have put access to crude in question. This is, however, proving positive for US producers who are stepping in to fill the gaps.

 

Asia: Progress continues on China’s new Silk Road, known as the Belt Road Initiative (BRI). Begun over 4 years ago, the project is developing key infrastructure to connect Eastern and Western markets in a more secure way. It should be noted, however, that China is no longer alone in its project; competing initiatives, such as India’s Freedom Corridor add complexity regarding the extent to which infrastructure will overlap not only geographically but in terms of access to cybersecurity measures and data sharing. The landscape of supply chain is evolving.

 

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