Global Supply Chain Review: June 2017

Global Supply Chain Review: June 2017

Mergers, acquisitions, tariffs, and drones. This month’s review runs the gamut, but one thing that is certain, it’s been a busy start to the summer.

 

U.S.: The grocery stocks responded with an immediate drop on the news of Amazon’s acquisition of Whole Foods. Supply chain leaders are predicting that Amazon will disrupt food supply chains much as it did book supply chains, forcing participants from authors, to publishers, to stores to cut costs and change the entire industry. Another issue to keep our eye on? How the acquisition continues changing corporate responsibility, as Amazon has yet to be held accountable for its lack of profits, while obtaining a multi-billion dollar company that serves under 15% of grocery shoppers.

 

England: Brexit continues, and tariffs are the most recent concern. If England exits the open market of the EU, it could face tariffs that disrupt and potentially decimate multiple industries, from fashion merchandizing to steel manufacturing. In the wake of snap election results that have weakened Teresa May’s ability for a hard exit, the possibility of free trade and a “soft Brexit” are now up for debate.

 

Scotland: The realities of Brexit and climate change will radically alter Scotland’s odds of economic growth in the coming years. Combined with an aging population, and the nation is facing possible downturn unless it makes major pushes for innovation. This is particularly the case for farmers, who are key players in the food supply chain throughout Britain and the EU.

 

France: Following the U.S. withdrawal from the Paris Climate Accord, France has responded by increasing its commitment to altering energy supply chains to meet the agreement’s demands. This month is has announced a ban on all new exploration in the oil and gas sectors, choosing instead to invest resources on renewable energy.

 

South Korea: As its neighbor to the north has made a show of weapons tests, South Korean finance minister has announced solidarity with the U.S. in any sanctions it might impose. In addition to shoring up support against military threats, the move may prove profitable for expanding supply chains in the region, which support US companies particularly in electronics and automobiles.

 

Japan: A historic accord is nearing, as Japan and the EU move closer to finalizing one of the world’s largest and most important trade agreements. Machine and automobile supply chains stand to make major gains, as the agreement would reduce barriers to trade between the regions. Questions remain regarding what environmental protections will stay in place or be relaxed to accomplish the deal.

 

Qatar: Under harsh sanctions from its neighbors Saudi Arabia, Egypt, Bahrain, and the UAE, Qatar is facing the possible closure of Al Jazeera in addition to the cutting of key supply chains. Asserting that the 10 day deadline would be impossible to meet, Qatar now must prepare itself for potential economic and diplomatic sanctions, forcing its reliance on Turkey and Iran for food and aid.

 

India: A $2 billion deal is in the works for India to purchase drones from U.S. manufacturers. India made the request for military and surveillance equipment in advance of their meeting with US President Trump. Approval has been announced from the White House, and would allow India to step up naval surveillance of the Indian Ocean. Yet to be seen? How this will affect Indian and US relations with China, a key rival to India’s emerging economy.

 

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