Supply Chain Revolution: From Abundance to Shortage
The world is no longer operating in an era of abundance when it comes to supply chains. The luxury of producing more when demand spikes or pulling from warehouses when ships are late has vanished. Instead, companies must adapt to a new reality where six forces are squeezing global commerce.
These forces include war, which has become an integral part of logistics due to the Russia-Ukraine conflict and the Middle East crisis. The Strait of Hormuz, through which one in every five barrels of oil and one in every four shipments of LNG pass, is a particular point of concern. When tensions rise, insurance rates triple overnight.
The climate is also playing a significant role in disrupting supply chains. In 2023, the world experienced its hottest year on record, leading to heatwaves that shut down plants and floods that delayed ports. Weather is no longer an excuse but a line item in budgets.
Politics is rewriting trade agreements, with compliance becoming a new cost for companies. The US-China decoupling and the EU's Carbon Border Tax, set to start in 2026, are examples of this trend.