Global supply chain shocks to cause lasting impacts: FedEx CEO
The company is shifting its capacity, including redeploying aircraft, in response to the changes
[SINGAPORE] The changes to global trade and supply chains driven by factors including technology and geopolitical risks are likely to persist over the long term, according to FedEx chief executive officer Raj Subramaniam.
“There’s a new equilibrium state being formed in this new supply chain pattern, and they’re much more regional in nature,” he said at the Bloomberg New Economy Forum in Singapore on Thursday (Nov 20). “The industrial economy is going to take a little longer to change. But once it changes, it’s difficult to go back.”
US President Donald Trump’s tariffs and the end of an exemption for low-value goods has upended global parcel trade and is likely to continue to weigh on the industry’s outlook next year.
FedEx, one of the world’s largest logistics companies, warned in September that it expects a US$1 billion hit from trade volatility this year, with most of that stemming from lower shipments from China to the US – a route that has been hit particularly hard by the trade war.
Subramaniam re-affirmed that dip in trade and said that FedEx has seen more flows from China to Europe, Latin America and other parts of Asia. The company is shifting its capacity, including redeploying aircraft, in response to the changes. “We can move our capacity far faster than manufacturing can move. So we know from the bottom up, we see these signals and we can react,” he noted.
Speaking at the same panel on designing resilient supply chains, ABB chairman Peter Voser said that trade disruptions were not following election cycles, but rather reflect fundamental changes in the market and a greater awareness of the expense that can be incurred.
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“Companies across the world, in all industries, are taking much more into account that the disruption effect is much more costly compared to actually keeping your product on the inventory side,” he added.
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