**Davos**: A new study reveals that 75% of global companies are overhauling supply chains to mitigate risks from geopolitical uncertainties, with emerging trade hubs like Vietnam, Mexico, and India becoming increasingly vital. The push for resilience in supply chains marks a significant shift in global economic strategies.
A recent study conducted by Economist Impact and DP World highlights a significant shift in global supply chain strategies, with three-quarters of companies worldwide redesigning their operations to collaborate with a broader range of suppliers. This strategic move is aimed at mitigating risks in the face of growing geopolitical uncertainty, particularly influenced by the ‘America First’ policies of the new US administration.
The findings were presented at the World Economic Forum and stem from a comprehensive survey involving over 3,500 supply chain executives globally. The results indicate an urgent need for companies to adapt rapidly to the increasing protectionism and shifting geopolitical alliances that characterise today’s trade environment.
According to the report, non-aligned countries are emerging as crucial players in addressing these challenges. Nations such as Vietnam, Mexico, India, the United Arab Emirates, and Brazil are now significant trade hubs, with 71% of executives asserting that these countries help mitigate trade risks, and 69% viewing them as vital in addressing obstacles brought about by global conflicts.
Sultan Ahmed bin Sulayem, the chair and CEO of DP World Group, elaborated on the evolving landscape of global trade, stating, “Global trade is now more complex than ever, requiring flexibility, resilience and innovation. DP World provides companies with the global infrastructure, local expertise, and advanced technology they need to succeed in this changing landscape of fragmented markets.” He further noted that Economist Impact’s study offers crucial insights into trade’s future in this novel context and emphasised the importance of fostering dialogue and innovation within the supply chain ecosystem.
The survey also revealed that approximately 40% of companies are increasing their sourcing within the United States, while 32% are implementing dual supply chains as a means to mitigate geopolitical risks. The strategy of ‘friendshoring’—moving supply chains to countries with similar political stances—is being adopted by around 34% of the participants in the survey, further illustrating companies’ efforts to manage tensions between global powers.
Economic challenges are also prevalent, with close to a third (33%) of executives citing persistent inflation and high interest rates as their primary concerns. To navigate the complexities of the current economic and geopolitical landscape, companies are focusing on strategies such as leveraging neutral hubs, diversifying their supplier base, and integrating advanced technologies like artificial intelligence into their supply chain management.
John Ferguson, global director of New Globalisation at Economist Impact, provided insight into the future of global trade, stating, “In 2025 and for the foreseeable future, global trade will be shaped by three forces: geopolitical changes, climate change, and a new wave of AI and automation.” He posited that rather than retreating from international trade, companies are stepping up to confront the challenges posed by these forces. According to Ferguson, businesses that remain agile and cost-efficient will find themselves at a competitive advantage, particularly those that intertwine risk management with experimentation in AI and demonstrate openness to change.
The data from this study underscores the critical role that supplier relationships play in successful digital transformation and the overall function of supply chains. As companies navigate this intricate landscape, the ability to manage and innovate within supplier relationships will be increasingly pivotal to driving revenue and sustaining competitive advantages in a fast-evolving market.
Source: Noah Wire Services
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