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Global Trade Networks: A New Norm in Disruption

Global trade networks have been strained in many different ways and fashions that have unexpectedly changed our outlook in logistics in the past few years.

That’s not to say that global trade hasn’t evolved consistently since the dawn of global trade. For thousands of years, what we know as “global trade” has slowly expanded with starts and stops, new avenues of trade as well as old avenues strengthened with new technologies. It is a process that is always evolving, and our worlds are seemingly getting smaller over this long span of time.

It is just that in the past couple of decades, or even the past few decades, global trade has grown expediently. Maybe we haven’t evolved fast enough in the wake of this growth, but we are on a learning curve. Whatever comes our way, we can surely adapt to.

On the one hand, the world is more connected than ever, but on the other hand, that connection can be disrupted in more ways than we can imagine.

For example, we are currently facing issues in the Red Sea that disrupt trade in amounts to what would be close to 15%. Although it seems like a figure that amounts to a minor set back in the grand scheme of things, it is a substantial amount.

Furthermore, in terms of rippling down the supply chain, it has its hand in everything down the chain. Whether it be raw material, parts, consumer goods, etc., timing is of the essence. That could mean a factory in Germany that sells goods to the U.S. may have to shut down temporarily in the wake of these developments. Or, it could be a company based in Italy that trades with India, and somewhere down the line it affects a company in Mexico. Either example would not be good for any of the players. A similar bottleneck is happening in Panama, albeit for different reasons. Nonetheless, it has a similar effect globally.

With all that being said, there is always a positive side, and sometimes old world solutions are the answer to some new age problems (relatively speaking).

It may take longer to go around Africa or South America, but if we learned anything from the past few years, it’s that we need to think on our feet. If that is our only solution at a given time then that is the solution that gets the ball rolling. Another alternative is gaining more trade networks locally. If raw materials, parts, and finished products are produced in the same country, or even the same region, suppliers may have more than one option in the case of a major global supply chain issue. There is only more than one way to solve a problem.

Honestly, disruptions in global trade are nothing new and we should expect more disruption in the future.

Who knows what the future holds. Whether it be political change, severe weather patterns, busts and booms, consumer behavior, and everything in between, one thing is for certain; change and the disruptions they bring will be inevitable. It was what we do with that change and what we have learned from past experiences that make all the difference in the world.

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