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Supply Chains Brace for Further Headwinds

Supply Chains Brace for Further Headwinds

(15 March 2021 – Australia) Exporters and importers are being urged to build contingency plans for potentially severe geopolitical impacts on their supply chain already reeling from COVID-19 induced disruptions.

Corporates that moved on to the front foot to pursue globalisation, global investment and manufacturing  outsourcing to reduce costs preceding the pandemic have invariably built deeper links with China across a wide range of industries. These trade corridors are being reassessed as China’s manufacturing costs increase, quarantine and customs restrictions were placed on many goods and outsourcing took place to other ASEAN countries.

Economic imperatives were high on the agenda for the ‘Quad’ grouping of the US, India, Japan and Australia and India that took place on 13 March, monitored closely by China given the onus placed on national sovereignty and self-sufficiency as the guiding force of international economic relations. If China perceives a threat to its security from supply chain discussions by groups such as the Quad, it could respond negatively.

Although major Australian retailers and importers of consumer goods have supply chains that are dominated by Chinese suppliers, East & Partners Trade Finance research has tracked a shift away from China as a key export/import geography underway for the last three years, with upcoming H1 2021 reporting available next month set to provide a fascinating insight into how CFOs and corporate treasurers are reweighting operations towards new trade corridors.

“The supply chain issues experienced as a result of COVID-19 have sharpened the focus of government and manufacturers around the world on diverse and sustainable supply chains” stated Lynas CEO, Amanda Lacaze.

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