This is compounded by the unrelenting impact that geopolitics has had on international trade in recent years, and on supply chains in particular. Now-familiar conflicts in Ukraine, Israel, and parts of Africa may be joined by new potential upsets to trade such as rising tensions in the China Sea and the wider Middle East.

Amid the uncertainty, however, I believe it is possible to both understand the nuances of supply chains and to mitigate for much of the upset. Here’s my list of five trends to consider in the near and medium term. 

Despite the upheavals faced in international trade, consumers expect greater choice of goods, made more cheaply and also more sustainably. Arguably, therefore, the just-in-time model is at risk: customers expect no less from their goods despite the obvious challenges businesses have in supplying them.

While we should be wary of cookie-cutter answers to the complex problems facing supply chains, others have argued (convincingly I’d say) that technology can ease some of the agony. Whether it is used to identify supply chain problems and inform stakeholders in real-time or to identify risks around fraud and supply-side shocks for instance, technology solutions for supply chains are increasingly worth considering. 

While no longer a new line item on our risk registers, Russia’s war in Ukraine (and now Ukraine’s war in Russia) continues to be a concern for business.

With trade with Russia paused, some businesses are finding that their products are still being used in the assembly and manufacture of weapons used against Ukraine infrastructure. These include dual use products, but also less obvious and more “benign” components which can be incorporated into weapons systems. When these are used against civilian targets in Ukraine, investigators may easily find which companies certain components have originated from.

How is this happening, and is there likely to be any drastic action from a new Labour government? As ever, businesses will need to continue to remain vigilant and be cautious about where ultimately their goods end up.

Of course, when it comes to supply chains, war is not simply a reputation risk. Escalating tensions in the Middle East emphasises the need to offer long-term security to warring regions, and to rebuild key infrastructure which has been damaged in conflict.

While China has not yet been drastic about Taiwan, it still views the island as a breakaway province and has not ruled out bringing it under control through force. As a centre for semiconductor manufacturing, a blockade or worse would therefore be a significant impact on the global economy.

While the supply of semiconductors is the immediate worry, there would also be knock-on effects on sectors reliant on these chips, including automobiles and consumer electronics.

The risk of sanctions from the US and allies in response to any Chinese aggression could further disrupt global trade. Companies reliant on Taiwanese technology and Chinese manufacturing could face significant delays, higher costs and possible setbacks to innovation.

Companies need to decide ahead of time alternatives and mitigation to their supply chains in both Taiwan and China.

The balance of re-shoring, near-shoring, friend-shoring and off-shoring remains delicate, and each business must navigate these decisions as best suits them.

But the way we describe trade matters, and I believe, affects our mindset. A case in point is the phrase ‘supply chain’. This conjures an almost conveyor-belt image of how products and goods are transported, possibly to the cost of other approaches. Should supply chains actually be “chains” is a question some in the industry have been asking in 2024.

Perhaps supply networks is the better way to think about this. The essence of this is the interconnected collection of all the suppliers, manufacturers, warehouses, and other entities involved in the delivery of a product from the raw material stage through to the end customer. Some of the benefits of this approach are touted as improved visibility, better forecasting and planning, streamlining and automation of processes and increased connectivity.

This new approach may force some to consider overall stock supplies, and the cash requirements that surrounds this. 

Lest we forget, but the Environmental, Social and Governance (ESG) aspirations of businesses is extending far into supply chains. As a thread of regulatory development, the issue is certainly not going away, but from a stakeholder engagement perspective it is also set to stay on the corporate radars. With an 80% of global emissions thought to be scope 3 there is a need for both action and transparency.

Rising environmental standards and the obsolescence of the existing shipping fleet will require more new ships to be built and to travel slower. The International Maritime Organization now requires ships to log carbon emissions, and vessels with poor scores may soon be barred from many ports, including in Europe.

One of the solutions is “slow steaming”, which, as with cars, means that greater fuel efficiency can be reached through slowing the speed of a ship. 

With the challenges and demands faced in and around supply chains in 2024 and beyond, you’d be forgiven for thinking that the good times are over. I’m not that pessimistic. Yes, the reality and expectations around supply chains have altered, thanks in no small part to events such as energy spikes, Brexit, Covid, and ongoing geopolitical tensions.

But globally we thrive through trade, and a similar exchange not only of goods but expertise, experience and finance is needed globally too. At NatWest we’re keen to work with our clients, and by extension their stakeholders, to make sure trade is an opportunity for our greater good, and not a risk that blights our balance sheets. 

To learn more about the latest trends and innovations in global trade, get in touch with your usual bank representative or contact us here. And if you’re attending Sibos 2024 in October, please join us on Stand J11 to learn more about the future of finance.