Advanced technologies are being deployed to tackle mounting global disruptions in the urgent battle for resilience

Catastrophic weather events, wars in Ukraine and the Middle East, trade conflicts, global pandemics—the forces disrupting supply chains are multiplying at a rate few could have anticipated.

Since Covid-19 swept the globe, risks have spiraled, forcing governments, industry groups, nongovernmental organizations, and corporate CEOs and CFOs to rethink supply networks from the ground up. And the current threats show no sign of slowing.

As global supply chains brace for escalating tariffs, rising shipping costs, and an expanding regulatory landscape, companies are scrambling to adapt to demands for greener, more-resilient networks. Technologies like artificial intelligence (AI) and distributed ledger technology (DLT) are bringing new tools to bear, but the fundamental challenges and growing fragility of globalization will remain, experts tell Global Finance.

“We’re certainly in a new era of global supply chains, but it’s not that today’s risks were entirely unseen before,” says Tinglong Dai, professor of Operations Management and Business Analytics at Johns Hopkins University’s Carey Business School.

Extreme weather has always been a threat, but its frequency and intensity are now unparalleled, Dai says. Similarly, risks such as the Houthi attacks on Red Sea shipping have increased.

“The real shift,” Dai explains, “is in our recognition that the global supply chain model of the past 30 years is no longer sustainable, especially in light of new geopolitical realities. The US can no longer count on a China-centric supply chain structure to operate smoothly. We’re moving toward what I would call a ‘Supply Chain Iron Curtain.’”

“The world has very much changed, and the risks of global manufacturing and transportation have increased tremendously,” says Zach Zacharia, associate professor of supply chain management and director of the Center for Supply Chain Research at Lehigh University’s College of Business. “The large shipping lines are all not going through the Red Sea, and again that has changed the cost and time required to transport goods.”

Events have forced companies to look more closely at shipping costs. Russia’s invasion of Ukraine dealt a blow to globalization, Zacharia continues. Before, it made sense to produce something at the lowest cost and then efficiently transport it.

“However, once Ukraine was attacked and Covid happened, you had to look at not just producing it cheaply but transporting it back safely at a low cost, which became much more critical,” he says.

“We do see more volatility in maritime supply chains,” says Jan Hoffmann, head of trade logistics at the United Nations Conference on Trade and Development (UNCTAD). It hasn’t helped that “key chokepoints like the Suez and Panama canals are increasingly vulnerable to geopolitical tensions, conflicts and climate change,” as UNCTAD states in its Review of Maritime Transport 2024, published in September.

Tariffs could soon be a complicating factor, as US President-elect Donald Trump has stated his intention to expand their use. Tariffs were a big issue in the recent US presidential campaign but are viewed by many as a lose-lose strategy. They don’t really make sense, because tariffs invariably provoke retaliatory tariffs, cautions Zacharia. Still, they seem likely to proliferate in the current geopolitical climate.

“A surge in trade conflicts, and especially between the USA and China, is altering traditional trade flows between these leading trade partners,” says Rouben Indjikian, a professor at Webster University in Geneva and former executive director of Global Commodities Forum at UNCTAD. One recent example: China gets soya beans from Brazil at the expense of its traditional supplier, the US.

Elsewhere, globalization itself has brought a certain amount of “just-in-time fragility,” says Evan Smith, co-founder and CEO at Altana AI. Boeing, for example, used to control most of the value chain in the manufacture of its aircraft. “Today it’s doing only the final assembly of its planes,” says Smith.

This means that if there is an interruption, for whatever reason, in deliveries of parts such as seats and engines from one or more upstream suppliers, the entire production line may have to shut down, as happened to Boeing in July.

“This outsourced, efficiency-at-all-costs supply chain [favored by so many companies] is efficient only under conditions of stability,” which is not what we have today, Smith explains.

Companies and organizations need to embrace a diversified strategy that includes reshoring, nearshoring, and friendshoring, says Dai. “It’s not just about bringing production back to the US. That alone won’t shield companies from risks, particularly those driven by climate change,” he argues. “We need to diversify not only across regions within the US but also by collaborating with allies and neighboring countries.”

Some have already traversed this path. “Apple has been quite successful in de-risking its global supply chain. They’ve built in significant optionality and resilience, taking concrete steps to reduce reliance on any single country or region,” says Dai.