Greater Supply Chain Diversification Is The Shortest Path To Re-Globalization

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If post-pandemic “re-globalization” is to take place and prevent world trade from splitting into two rival blocs, supply chains must be more diverse, as reported by The Loadstar.


Coleman Nee, a senior economist at the World Trade Organization, told attendees of the World Cargo Summit this week in Abu Dhabi that the world must decide how to rebuild after Covid.

Re-globalization necessitates a change in perspective on the supply chains we want, which necessitates diversifying and welcoming previously excluded nations, he said.

The alternative would be to split up the globalised supply chain model into two rival trade blocs, which would only limit GDP development and prolong the current economic issues.

Greater involvement of developing nations was encouraged by Mr. Nee, who viewed them as “a crucial driver for any expectations of long-term economic growth.” In addition, he recommended prudence while applauding efforts towards near-shoring.

As he put it, “Near-shoring is about decreasing volatility, but it may also create its own risks if corporations regard it as a substitute for global chains, putting all their eggs in one basket.”

Alina Fetisova, a trade facilitation officer at the International Trade Center, said that nowadays, for every $1 it costs to produce a good, developing nations pay an additional $2.19 to move it.

“Let’s take Kenya,” she said. “Exporting coffee required more than 60 stages, but delays can be eliminated by re-engineering processes and procedures; each day saved is equivalent to 1% of value.”

“We were able to aid with this by assisting in the re-engineering of cross-border operations by lowering the quantity of paperwork and processes needed to transport goods. Trade flows are decreased more dramatically by time delays than by tariffs.”

Act of policymaking

Ms Fetisova urged businesses to work more closely with governments to remove obstacles that hinder operations in developing nations. The creation of national facilitation committees, according to her, would “enable different actors to participate in the act of policymaking.”

“SMEs account for 60% of the workforce, and women own 40% of these businesses,” she continued. To reflect the realities of the market, regulation needs to be rewritten. And the only way to accomplish this is through genuine democracy, which promotes the participation of those who have traditionally been marginalised. We also need programmes to help those running SMEs into leadership roles because the transportation and logistics industries have been controlled by men.

Despite the repercussions of the invasion of Ukraine, Mr Nee said he thought the prognosis for the world economy was improving slowly, and inflation was declining. He added: “The scenario is substantially less bleak now than it was near the end of 2022.”

He claimed that despite the Global Purchasing Manager’s Index being at its lowest point since 2009, delivery times have returned to levels seen before the epidemic as supply chain difficulties had been handled. He continued that the issue of core inflation in categories like food and fuel required action from central banks.

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Source: The Loadstar


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