Supply Chain Experts Say Post-Covid Sourcing Diversification Will Reshape Shipping Flows

IEEPA Refund Calculator Investor Relationship Financial Overview Company Overview Financial Overview Corporate Governance Overview Board of Directors Committees Internal Audit Regulations Shareholder’s Insights Shareholder’s Insights Shareholder’s Report Investor Contact Investor FAQ Contact MyDimerco English繁中简中 Home » Supply Chain Experts Say Post-Covid Sourcing Diversification Will Reshape Shipping FlowsSupply Chain Experts Say Post-Covid Sourcing Diversification Will Reshape Shipping Flows by Dimerco | Mar 16, 2023 During recent episodes of The Freight Buyer’s Club podcast, which is sponsored by Dimerco Express Group, host Mike King spoke to Jon Gold, VP for Supply Chain and Customs Policy at the National Retail Federation, Paul Page, Wall Street Journal logistics editor, and Bjorn Vang Jensen, Executive Director, International Transport at Cummins, about how shipping lanes are being reshaped in the wake of COVID. All see diversification of product sourcing away from China in the post-Covid era as manufacturers and retailers seek more supply chain resilience. This will have a major impact on trade and shipping patterns. Gold said U.S. retailers had been looking to diversify supply chains even before the pandemic, not least because of the U.S.-China trade war. These increased tariffs had encouraged them to find producers located outside China. Speaking on the launch episode of The Freight Buyers’ Club podcast, Gold said companies were looking to diversify “not just because of the tensions in the US-China trade relationship, which I think are going continue, but also because of what has happened over the past couple of years with all the supply chain challenges. They realized that they need a more diversified, more resilient supply chain.” Zero-Covid policy = tipping point Speaking on episode 2 of The Freight Buyers’ Club, Bjorn Vang Jensen admitted he had previously been cynical when near-shoring, friend-shoring and re-shoring of manufacturing were raised as solutions to enhance supply chain resiliency. However, he said pandemic disruption changed the trading landscape, in particular because China’s zero-Covid policy had “a massive impact on global supply chains, and I think people are done with having massive issues with supply chains.” The diversification process is already underway, although China continues to dominate the U.S. sourcing landscape. According to PIERS, part of S&P Global, China (including Hong Kong) supplied 40.7% of US imports last year, although this was down from the 42.4% recorded in 2021. Countries in South Asia, Southeast Asia and Latin America stand to benefit most from a shift away from China. Paul Page, Editor of the WSJ Logistics Report at the Wall Street Journal, told The Freight Buyers’ Club that India had great potential. “I see a lot of changes with Apple and semiconductor manufacturing that I think are going to have a profound impact on India,” he said. “Not necessarily this year, but over time.” Another beneficiary will be Vietnam, which has already seen large increases in container shipping volumes and has been investing heavily in its infrastructure. “Countries like Thailand, Vietnam and others have stepped into the vacuum that China left and I don’t know that China can completely pull back from that,” said Jensen. He predicted Thailand would benefit from a shift of cargo away from China. Singapore’s role as a key global shipping hub would be reinforced, while new terminal facilities in Indonesia could enable more direct deep sea calls as manufacturers took advantage of its favorable demographics. The upshot of these changing cargo flows within Asia would prompt container lines to adjust rotations, although Jensen insisted these schedule alterations would be “evolutionary” rather than “seismic” shifts for the box shipping sector. Fragmented shipping demand Page believes the growth of supply chains not focused on China will inevitably add complexity to procurement and logistics planning. “In some cases, I think you could say there are two supply chains forming,” he said. “There’s a traditional China-based supply chain and a non-China supply chain, and I think those are playing out in different ways for different products.” He said more fractured, diverse supply chains could render the largest 24,000-TEU vessels going direct from Asian hubs to Europe “less significant” and added: “You have to wonder what that means for capacity decisions by carriers. Are the economies of scale still there? Do they matter as much? Do they make that difference? Are there other things that matter?” China alternatives are limited Diversifying retail sourcing is not easy, according to Gold. “It takes time to switch your supply chain,” he said. “It’s not something that can be done overnight. It takes months, if not years, to find new vendors and suppliers that can meet all your requirements on quality and quantity and product safety requirements and making sure you’ve got the skilled workforce where it needs to be.” Those thoughts are echoed in Dimerco’s recent eBook on The Logistics of China Plus One. Gold said not many countries possessed China’s impressive logistics capabilities and infrastructure. “There’s no new China that has all the capacity that China does, so you can’t move everything out of China all at once,” he added. Jensen also said it would be foolhardy to write off China. “They have changed their [zero-Covid] policies,” he said. “They understand now, I believe, that this was detrimental to China’s reputation as the factory of the world. So, while I do now agree that some near-shoring, friend-shoring and reshoring is taking place, I do not believe that this will pull the rug from under China, and China’s place in the world economy.” Post Tags: Asia Pacific | China | Covid-19 Response | Europe | Freight Forwarding | Multimodal Transport | Ocean Freight | Podcast Episode | Semiconductor | Supply Chain Solutions | USA We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.ACCEPT Cookie settingsManage consent Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. 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