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Geopolitical Tensions Set to Worsen Supply Chain Disruptions

Geopolitical Tensions Set to Worsen Supply Chain Disruptions

(14 March 2022 – Europe) Russia’s invasion of Ukraine could fundamentally restructure global supply chains in a way the COVID pandemic couldn’t even achieve.

Carey Business School Professor of Operations Management & Business Analytics at Johns Hopkins University, Tinglong Dai, reports in The Conversation that global supply chains were already in dire straights as a result of the COVID-19 pandemic, leading to damaging shortages, disruptions and price inflation. Francis Fukuyama, the American political scientist who described the collapse of the Soviet Union as the “end of history,” suggested that Russia’s invasion of Ukraine might be dubbed “the end of the end of history.”

“As an expert in global supply chains, I think the war portends the end of something else: global supply chains that Western companies built after the Berlin Wall fell over three decades ago” commented Tinglong Dai.

While Russia only accounts for less than two percent of global gross domestic product (GDP) and Ukraine 0.14 percent, they have minimal direct impact on global supply chains with the exception of a handful of critically important areas including energy, wheat, rare metals such as semiconductor grade neon and fertilizer. The war has had a devastating impact on global trade movements, with numerous tankers stranded at ports as a result of sanctions imposed on Russian-connected ships.

“Russia’s war against Ukraine is still ongoing, and there’s no way to know for certain how long the sanctions will remain in place or whether companies that have chosen to leave Russia will return. But I believe one thing is certain: Global supply chains, like the rest of the world, will never be the same again as a result of this war” Tai added.

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