News / Geopolitical shocks pose the greatest threat to supply chain health

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Geopolitics is the greatest risk facing forwarders and the air freight industry in 2024 – despite the potential for disruption to boost air cargo.

Political crises were the number one concern, agreed delegates at the ACE air freight forwarding event in Abu Dhabi yesterday.

“Geopolitical tensions are affecting our business,” said Turgut Erkeskin, president of FIATA.

“The India-Middle East-Europe corridor was under discussion before the Israel crisis – that is now not possible. There have been impactful shocks to the supply chain which have affected logistics.”

But while supply chain disruption can often boost air freight, Glyn Hughes, director general of Tiaca, argued that the health of all sectors was more important.

“As ocean schedule reliability goes down, the air cargo price goes up; when there is disruption in maritime, it is better for air cargo. But we need a more robust maritime sector because the global economy needs it.

“Air accounts for only about 1% of global trade, so it’s crucial for the long-term sustainability of the global economy that the maritime sector works.”

Mr Erkeskin added that the different transport modes did not, in fact, compete. He said: “When shipping is interrupted, there are other ways of moving goods – air, rail and so on. These segments do not compete, they complement each other. Air is an immediate solution.

“We often look at how we can shift goods to rail or shortsea services from trucking, to cut emissions. But we are never going to erase trucking from the market, and rail infrastructure is limited. We will always need all the transport modes.”

Speakers and delegates, meanwhile, were generally pessimistic about the prospects for 2024. Some executives told The Loadstar they believed 2024 would be a “carbon copy” of 2023, others claimed it would improve by the fourth quarter.

“I have some confidence for the second half of 2024, but there will be a relatively poor start,” said Mr Hughes. “We have to be prepared for the world changing, and it’s critical to be agile.

“[Geopolitical risk] also has an impact on the consumer, who is more likely to save than spend.”

Mr Erkeskin added that, despite some positive expectations for a “relatively bright Q4”, the “most important issue is uncertainty”.

“How will shocks affect globalisation? Major changes can affect the efficiency of air operations.”

For deep dive into how geopolitics is set to transform supply chains check out this recent Loadstar Podcast: 

Deep Dive Podcast: The end of globalisation and a new (trade) Cold War?