Ongoing geopolitical disruption and instability are here to stay, which means that companies need to re-evaluate global supply chains.According to market analysts at Xeneta, a leading ocean and airfreight rate benchmarking and market analytics platform, a lot has happened already in the past few months that will have a short- and long-term impact – be it the ongoing war between Russia and Ukraine or the military exercises in Taiwan.“There is no definite way of predicting what will happen tomorrow,” says Emily Strausbell of Xeneta. “Looking at the global political events of the past few months, however, we can say that geopolitical disruptions will continue. Taking this into consideration, and the impact it can have on your supply chain, is of growing importance.”She says this requires significant insight into one’s current supply chains. “Are you going to keep putting your supply chains up where they are the cheapest, or are you possibly considering other options, including possible supply chains closer to home? What is the potential disruption to your supply chain and your business due to an event such as the Russia/Ukraine war for example?”Strausbell says with pressure mounting globally, shippers are best advised to understand their logistics networks and identify the risk factors that could impact them.It was particularly important to do this before tendering long-term shipping contracts.“We are seeing spot rates decline at the moment. Where does that leave the contract market? When disruptions happen and you are bound into a contract, what then? When spot rates suddenly drop and become a more viable option, do you have a plan? Do you have a clause in place that allows you to renegotiate the rate?”Peter Sand, chief analyst for Xeneta, agrees with Strausbell, saying shippers are faced with far more decisions than they were a year ago. “Then it was a no-brainer to sign a one-year contract for big volumes, but now it is no longer the case. Now you might want to consider shorter tenures for your volumes on the long-term market, or maybe into the spot market with more volumes than one would normally have.”He says in these uncertain times shippers need to engage with their carriers to ensure they are making the best decisions possible and getting as many extra services attached – from equipment being guaranteed to avoiding their cargo rolling over.“One must not forget there is a host of other factors that impact on supply chains that are completely out of the sphere of inf luence of carriers or shippers – from the congestion we are seeing at some of the main terminals in the United Kingdom, the US and Europe, to the labour tensions in various regions of the world.”The impact of all these factors and more on supply chains, says Sand, has to be considered. “It is now all about striking the right balance, considering the most important trade lanes, the volumes that you need as a minimum requirement, and the amount of risk you are willing to take.”
