Re-shoring in these days of geopolitical tension carries risks

Source: The Loadstar
Date: 23rd January 2024

Domestic political tension across almost 75% of emerging manufacturing markets has raised major question marks over the diversion of global supply chains away from China.

Analysing five-year trends across 40 markets making up the ‘near-shoring/friend-shoring arena, Verisk Maplecroft discovered that 27 countries were facing issues of civil unrest, government instability, exposure to conflict or terrorism, and more.

Principal resilience consultant told The Loadstar: “What we are trying to show is when it comes to re-shoring, alternative locations have their own risks.

“Companies need to be cognisant that diversification may trade one risk environment for another. Of course, this comes in a moment where we have witnessed the emergence of a multitude of simultaneous crises.”

The report highlights that these risks were not confined to the global south, with Hungary, Poland and Slovenia all witnessing marked increases in their political risk scores.

Exemplifying the swapping of risks while abandoning China may make for good business sense for US companies, as relations between the two superpowers continue to deteriorate, Mexico ranked fifth when it came to the expectation of civil unrest over the next 12 months.

This year represents the largest global election year on record, with more than half the world’s population in regions that will go to the polls this year, raising concerns for unrest.

Among them are key reshoring hubs like India, Indonesia, Mexico, Poland and Turkey, all featured in the report and seeing the chance of civil unrest has grown since 2019, when the investigation began.

The drivers of civil unrest were “nuanced” and differed across jurisdictions, but “of course included economic hardship”.

However, there were positives to be drawn from the report. What we’re seeing is a lot of supply chain risk questions. Supply chain resilience is an area companies want to understand. This is a positive as it is pushing towards a desire to understand suppliers and supplier networks, and to create stronger, more resilient chains.

Doing this drives a best practice approach and spotlights vulnerabilities. All of which drives them to learning a wider range of risks.

Asked whether any major change will be foreseen in the make-up of global supply chains as a consequence of deepening geopolitical divides. Very unlikely, because “large-scale changes are quite hard to effect”.

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products