Regionalization of supply chains

The current conflict in the Middle East has far-reaching effects on global supply chains. Jane Enny van Lambalgen (pictured), CEO of the consulting firm Planet Industrial Excellence, describes the situation as a „test of resilient supply chains.“ In a recent statement, she emphasizes that companies should reduce their intercontinental dependencies to better protect themselves against potential supply shortages that may arise from geopolitical tensions, tariffs, or military conflicts.

The expert highlights that many companies have begun to rethink their procurement strategies and shift to local sources following the COVID-19 pandemic. This realignment has already proven beneficial during the trade conflicts under the Trump administration. However, the current conflict in the Middle East is the crucial test to assess how successful the regionalization of supply structures has actually been.

Blocked sea routes and rising costs

Van Lambalgen points out that nearly all major sea routes between Asia and Europe are currently blocked. This includes the Strait of Hormuz, the Persian Gulf, the Gulf of Oman, the Red Sea, and the Suez Canal. The diversion of cargo ships around the Cape of Good Hope leads to an extension of transit times, which can range from ten days to two weeks. This situation also affects freight rates, which could increase by 30 to 60 percent, impacting air freight as well.

The expert warns of the consequences of these developments: “In addition to higher costs and significant delays, the congestion of ports poses a huge problem.” She describes the situation as a “supply chain chaos” that could lead to production stoppages and rising prices for end consumers. Industrial goods, electronics, and consumer goods of all kinds are particularly affected.

www.planetie.ch