The cumulative disruptions over the last five years from ever-increasing costs in Asia, geopolitical tensions and trade tariffs, the pandemic’s turbulence in global shipping and now the military conflict in Europe have exposed the profound interdependencies and inherent vulnerabilities in globalized supply chains.īRINK: Are there any critical products that come from Russia and Ukraine (besides oil and gas) that will be disrupted? Whichever the outcome, I think it is another nail in the coffin of our modern-day over-globalized supply chains. There is enormous uncertainty as to whether this crisis could be over by the end of the month, whether it could drag on for years, or worst-case scenario, could trigger a direct military conflict between NATO and Russia. Unfortunately, this is another massive disruption for today’s globalized supply chains, on top of two years of COVID-induced supply chain chaos, from which many businesses (and economies) have still not recovered. A Nail in the Coffin of Over-Globalized Supply Chains However, just about every supply chain will suffer a negative impact from this crisis, for example, with fuel prices surging and shipping routes being cancelled or diverted. The risks for such containerized rail-freight are now prohibitively high, so traders are frantically searching for alternative routes, at a time when the containerized shipping sector is still besieged by port congestion, shipping delays and container shortages resulting in extensive delays and record-high freight rates. Many of these trade routes from China transit through Russia, Ukraine and Belarus on their way to Western European destinations. In 2021, rail operators ran more than 1,200 freight trains per month between China and Europe, transporting almost 1.5 million containers. Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. In particular, there are immediate consequences for ground-based freight networks transporting goods between Asia and Europe by road and rail. MILLAR: Even though this is a very fluid and fast-moving scenario, and notwithstanding the terrible humanitarian calamity, it is already clear that the Russia-Ukraine conflict will have far-reaching ramifications for many supply chains. The further disruption caused by Russia’s invasion of Ukraine could cause many companies to rethink their suppliers.īRINK spoke to Mark Millar, the author of Global Supply Chain Ecosystems and a supply chain expert based in Hong Kong, and asked which supply chains are being most impacted by the crisis. Global supply chains were starting to recover from two years of upheaval caused by the pandemic when the Ukraine crisis hit.
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