Supply Chain Disruptions: How Recent Events are Impacting Global Trade
In the wake of the pandemic, supply chain disruptions have become a recurring issue for businesses worldwide. Most recently, Houthi rebels from Yemen have caused further disruptions by attacking ships in the Red Sea. This has led to shipping companies avoiding routes through the Suez Canal out of caution.
According to a report by JLL, approximately 12% of global trade and 30% of world’s containers pass through this key trade route. As a result, delays and higher costs have become commonplace for businesses relying on this route.
Lisa Graham, Director at JLL’s EMEA Industrial & Logistics Research & Strategy department stated that these disruptions are prompting companies to review their inventory management strategies even further. It is becoming increasingly clear that over-reliance on one specific route or region is unwise.
To mitigate these risks and diversify their inventory locations, many companies are shifting from just-in-time to just-in-case inventory management systems. Additionally, incorporating only aligned trade partners into supply chains can help reduce reliance on one particular region or country.
While these changes may be costly and take time to implement fully , they will ultimately lead towards more resilient supply chains in case unexpected events occur again in future . Despite weakened consumption for goods in Europe due to reduced shipping via Suez Canal , it is expected that its impact will be temporary .
The need for robust contingency plans and flexibility in logistics operations has been emphasized once again with recent events disrupting global trade . Businesses must adapt quickly as unpredictable situations continue arise within our interconnected world economy .
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