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From chains to webs: how crises have transformed global supply routes

From chains to webs: how crises have transformed global supply routes
Copyright euronews
Copyright euronews
By Guy Shone & Jack Parrock
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Conflict, covid and climate change have transformed global supply chains, with businesses doing more to mitigate risk - and investing in technology to handle increasingly complex networks

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Conflict, covid and climate – it’s been a perfect storm for global supply chains. But it's also been an opportunity for companies to rethink their strategies: and invest in technologies that help them handle increased complexity.

The 5 factors global supply chains are fighting

So what are company bosses doing to navigate the stormy economic weather?

The World Economic Forum suggests there are 5 factors global supply chains are fighting.

Skyrocketing inflation - which means millions of consumers are cutting back which hits demand but also creates uncertainty making it tough for supply chain experts to plan.

Labour unrest - across Europe there have been many recent examples of workers taking industrial action partly due to their pay packets now being worth less.

Energy shortages - rising energy prices have caused companies to cut back too. Limiting production and making life even trickier for those supply chain planners.

Geo-political uncertainty - political tensions and conflicts have created even more disruption and uncertainty.

Extreme weather - all of this comes against a backdrop of the climate crisis. Changes to regulation, but also the very real damage and disruption caused by the dramatic shifts in weather patterns we are all already starting to experience

These are major issues. But on the flip-side WEF research also revealed that 77% of Chief Economists  expect businesses to respond and tackle the tough conditions with innovation by optimising supply chains.

From supply chains to supply webs

So should we feel anxious or optimistic about businesses' ability to supply us with the products and services we rely on? Ranjeev Menon is group CEO of GWC, a leading logistics and supply chain firm based in Qatar.

It does increase complexity because you’ve got multiple vendors supplying the same products and it also has an impact on the cost - but this de-risks the supply challenges or the supply shocks.
Ranjeev Menon
Group CEO, GWC logistics

He believes that positive signs are on the horizon.

"Global supply chains are recovering after about three hard years," he told Euronews. "It completely looks very, very different today. The companies adapted differently in terms of diversifying their production and not relying on one supply source or country. So if you look at the supply chain today, it looks more like a supply web. Now it does increase complexity because you’ve got multiple vendors supplying the same products and it also has an impact on the cost - but this de-risks the supply challenges or the supply shocks, like what we’ve seen in the recent past."

The shipping industry invests in technology

Shipping still powers a vast part of the global economy: eleven billion tonnes of goods are shipped around the world every year.

Antwerp in Belgium is Europe’s fastest-growing port and it is investment in technology that has enabled it to manage that growth.

A super futuristic building overlooks the port and its very modern look is in line with what they're trying to do operationally. The authority is trying to make this one of the world leaders in digitalisation.

The man at the heart of the operation is Erwin Verstraelen, the Chief Digital Information & Innovation Officer at the Port of Antwerp. He is overseeing the implementation of a so-called "digital twin" of the port to support the terminals, the shipping companies and the inland waterways.

"You bring that data together and you provide the view they want with the data set they need at that moment in time," he explains. "And they can play, they can add, they can throw data layers out. And as such it starts to grow, it triggers new use cases and initiatives, and if we of course have a new data feed, or a new data source we can get our hands on, we bring it in, it triggers another innovation cycle and we say oh that’s interesting."

Nautical communication is still mainly done voice to voice - on phones and radios, making it hard to track.

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Two years ago, the port piloted a project to use Artificial Intelligence to turn the spoken word into text. It didn't work back then but they've redone it now and the technology has improved so much, the AIs can even detect sentiment in voices - it knows if two ship captains are having an argument.

"So if people who are responsible for investigating an accident or something that took place, that are now looking for the needle in the haystack, they can query that and in 5 to 10 seconds, they can...OK it was this," says Erwin.

At nearly 130km2, the port of Antwerp is the 14th biggest in the world and the second biggest in Europe. For Erwin, the challenge to digitalise the operations isn't daunting, it's exciting.

Hi-tech systems to save space and time

Using hi-tech systems to save space and time has become a multi-billion euro business. One of the world leaders for innovation in this space is GXO logistics and Mark Manduca is their Chief Investment Officer.

"GXO is a company that came about through a number of acquisitions over the last 20 years," he explains. "Today, it looks basically like 900 plus warehouses operating in over 28 countries across the globe. What we're trying to do is basically make people's warehouse more efficient, faster and more accurate that they can do it themselves.

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He says that their company has seen big changes over the last three decades.

"From a shipping perspective," he says. "In the last, let's say, 30 years from a global trade standpoint, goods were being shipped in essence out to Asia to be manufactured and then ultimately come back to consumers. That traditional trade lane has been put under significant pressure, not just because of what we've seen with the pandemic or zero-covid, but also because wages, quite frankly, have gone up substantially such that the differential between markets in the East versus markets in the West have closed over the last ten years. "

Space for optimism

So the so-called “perfect storm” of conflict, covid and climate change did hit global supply chains hard. But across the disciplines of planning, shipping and storage - technology is solving problems so fast that the forecast is far more nuanced, far more optimistic than many might have feared.

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