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Inflation and geopolitics will plague global supply chain for next five years, DP World warns


Inflation and geopolitical tensions are set to dominate concerns for the global supply chain over the next five years, according to a new DP World study.

DP World surveyed dozens of freight forwarders in October and said the responses paint a stark picture of an industry in turbulence. Climate change and access to talent weigh heavily on business resilience and the ability to create seamless supply chains.

Some 63% of the respondents said inflation is a main concern, while 56% cited geopolitical tensions as another major cause of concern.

Around 10% of the respondents said they had changed the markets they do business in due to uncertainty. Indeed, these worries look set to dominate the thoughts of freight forwarders for years to come. Some 78% said they expect geopolitical tensions and inflation to remain concerns over the next five years, with two thirds (66%) of freight forwarders believing it is ‘impossible to say’ when economic disruptions will subside.

Encouragingly, many in the supply chain industry appear cautiously optimistic. Three-quarters (75%) of the respondents said they expect technology to be a significant factor in easing the current supply chain woes.

In fact, more than half (56%) believe digitalisation will be the single biggest driver of efficiency, reducing bottlenecks and supporting the industry going forward. Technology will have a considerable impact on the supply chain, with three in four saying it will lead to cost savings and a greater ability to target and deliver to new customers.

But many were unclear on how to integrate technology into their industry, with a third saying they wanted to, but simply did not know how to do it. It is unsurprising then that half of the freight forwarders said they are further behind on their company’s digital transformation journey than they had hoped.

“Global supply chains are significantly impacted by the pandemic, geopolitical tensions and the looming threat of the global climate change crisis,” said Sultan Ahmed Bin Sulayem, group chairman and CEO of DP World.

“In fact, these challenges have demonstrated that many parts of the global supply chain infrastructure are fragile. These rising concerns makes it imperative for logistics operators to come up with the tools and solutions that offer real-time visibility across the entire supply chain. This can allow trade routes to be fit for purpose, and thus facilitating a more seamless movement of trade around the globe.”

Other challenges that freight forwarders are currently experiencing include rising and unpredictable freight rates, with 80% highlighting this as the biggest worry keeping them awake at night. The lack of financing options is another major issue, with 37% of those surveyed saying this has a crippling effect on their ability to deliver goods.

Interestingly, whilst the pandemic has disrupted every industry, including logistics, it has resulted in several positive benefits. A third of freight forwarders said it prompted a much-needed overhaul of their business, with 41% saying it has changed how they track cargo. Over half (54%) said it has increased pressure on management to operate more sustainably.

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