As supply chains break, hope is not a strategy

THE super-efficient global supply chains may be consigned to history soon. Political sparring between two of the world's largest economies and the aftermath of Covid-19 have thrown a spanner into that shiny image of factories in China gobbling raw materials to make cheaper goods that move seamlessly through docks and airports to put everything from food on your plate, fuel into your car and smartphones into your hands.

For decades, these supply chains have been the foundation of modern business. They contribute to nearly 70 per cent of global trade today, up from 30 per cent in 2011. Then Covid arrived unannounced. First came the supply shock in masks, ventilators, gloves and sanitisers. Consumers panicked, raiding food and toilet paper aisles in cities from Singapore to Sydney and San Francisco. Many countries banned exports, creating wild price spikes globally. As companies ordered people to work from home, airlines froze operations, tourism and hospitality floundered and demand shifted drastically to online channels for banking, shopping, entertainment, healthcare and more.

Gone is the interdependent, cooperative global economy of yesteryears. Enter the new economy of protectionism and self-interest. Global trade may contract between 13 to 30 per cent in 2020, estimates the World Trade Organization. These are startling statistics. Hope is not a strategy in such times.