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 as part of the study. The findings from the survey were showcased at the Global Freight Summit.
The survey showed that inflation is the main concern for 63 per cent of the respondents, while 56 per cent cited geopolitical tensions as another major cause of concern.
This is having major ramifications for businesses. Around 10 per cent 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 per cent said they expect geopolitical tensions and inflation to remain concerns over the next five years, with two-thirds (66 per cent) 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 per cent) 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 per cent) 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.
Sultan Ahmed Bin Sulayem, group chairman and CEO of DP World, said: “Global supply chains are significantly impacted by the pandemic, geopolitical tensions and the looming threat of the global climate change crisis. 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 per cent highlighting this as the biggest worry keeping them awake at night. The lack of financing options is another major issue, with 37 per cent 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 per cent saying it has changed how they track cargo. Over half (54 per cent) said it has increased pressure on management to operate more sustainably.
In other news, DP World intends to invest up to $500m to cut carbon emissions from its operations by nearly 700,000 tonnes over the next five years. The planned reduction in carbon emissions by nearly 700,000 tonnes reflects a 20 per cent cut from the levels in 2021.
