Top forwarders not expecting globalisation to end
01 / 06 / 2022
By Damian Brett
Global supply chains have been battered by constant disruption for more than two years, leading some to warn that there could be an upswing in nearshoring.
First there was the Covid outbreak, then capacity challenges across all modes of transport, issues with worker shortages due to quarantine requirements, the impact of Russia’s invasion of Ukraine and China’s zero-Covid policy that has placed cities with millions of people under strict lockdowns.
This has led some to suggest that globalisation is set to go into reverse, with the cross-border flow of trade and goods falling as a share of GDP as companies bring production closer to home to maintain supply chain integrity.
It feels like a long time ago, but there had even been some suggestion pre-Covid that globalisation was grinding to a halt.
Back then it had been reasoned that higher wages in emerging economies, trade wars and more extreme weather conditions as a result of global warming would push companies to move their manufacturing bases closer to the end market.
However, the heads of DHL Global Forwarding and Kuehne+Nagel are not expecting a full reversal of globalisation, although they acknowledge that supply chains are changing.
Speaking at an online event on May 23 to reveal the latest updates to the myDHLi customer portal, DHL Global Forwarding, Freight chief executive Tim Scharwath said: “I do not see that global trade will go away and everything will be nearshored.
“I think there might be some movements [of production centres] outside of China, but staying in the Asian market.
“There might also be some movements closer to certain markets be it in North America or Europe, but for us in forwarding that means we will still need to move goods because we will still need to truck goods.
“So I do see there is some movement there, but it won’t be the end of global trade, that’s for sure.”
Speaking earlier this year, Kuehne+Nagel chief executive Detlef Trefzger also said it would be too difficult to turn the clock back on globalisation.
“We live in a globalised world and you can’t rewind that,” he said.
However, Trefzger said that he expected multi-sourcing to increase in some cases.
“We see that for certain industries and certain customers in these industries, not in general, but for specific companies, second-sourcing, so not one supplier for at least three suppliers [in different countries].”
Trefzger added that companies may also look to increase stock levels from two to five days’ worth in order to guard against disruption.
“But we don’t see a general trend of changing globalisation,” he added.
“We see some shifts of certain goods moving from China, low-margin goods, being produced now in Vietnam rather than in China in part as a reflection of the Chinese five year plan and their focus on high-yielding technology and savvy and sustainable production.”