GlobalData: Supply Chain Pressure Emerges as Global Concern

The escalation of the ‘Red Sea Crisis’, amid heightened geopolitical tension between Israel and Hamas, has undoubtedly sent ripple-effects through global trade and operations. 

This, compounded by geopolitical flashpoints such as the Panama Canal and South China Sea, is continuing to reshape trade dynamics and mount pressure on companies’ logistical capabilities. 

As a consequence, supply chain pressure has emerged as a prominent concern for companies around the world throughout the first quarter of 2024, according to GlobalData. 

The leading data and analytics company’s latest report highlights the significant impact of geopolitical happenings on global supply chains, including increased shipping costs and delivery times.

“Political instability and geopolitical tensions continue to impact business operations,” comments Misa Singh, Business Fundamentals Analyst at GlobalData.

“Regional conflicts are impacting suppliers and companies in sourcing and delivering products. Persistent tension in the South China Sea has also contributed to disruptions, and as these disruptions reshape freight flow, the supply of goods may be delayed and result in soaring shipping costs.”

Tesla among firms hit by shipping issues

Filings Trends and Signals Q1 2024 report, GlobalData points to Penguin International as an organisation experiencing severe supply chain disruption and cost escalation from European suppliers shipping through the Red Sea.

On the flip side, aerospace, defence and security company Airbus reveals it has actually benefitted from the tumultuous period. This has resulted from rising air freight demand and prices due to increased container ship voyage times amid the Red Sea and Panama Canal blockages.

Shipping companies are now taking longer routes around the Cape of Good Hope, Cape Horn and the Suez Canal to get to their destinations, placing further pressure on countless companies. 

These shipping diversions, in conjunction with an arson attack at Tesla’s Berlin car factory, have resulted in production being halted at Tesla. 

What’s more, a lack of rainfall in Panama has forced a reduction in the number of vessels travelling through the Panama Canal.

SLP Resources Berhad, a manufacturer of environmentally-friendly plastic packaging, has been among those to bemoan delays and extended lead time for goods imported from North America, although supplies from the Middle East and Asia-Pacific remained unaffected.

“Years of disruption following the COVID-19 pandemic and geopolitical tensions have increased the vulnerabilities of global logistics,” Misa adds. 

“Many supply chains have become progressively more extensive and interconnected, making them susceptible to disruption and delays and companies will surely keep an eye on how things unfold.”

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