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TSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNINGHON: GAUGE THE UPSIDEXPO: STELLAR EARNINGS DELIVERYMAERSK: DEMAND DISRUPTION RISKMAERSK: FOCUS ON MARGIN IN LOGISTICS AND SERVICESMAERSK: GROWTH UNDERPERFORMANCE IN OCEAN MAERSK: WHY IS GEMINI SUCH A GOOD IDEA MAERSK: INTEGRATOR STRATEGY MAERSK: EIGHT YEARS AFTER THE LAUNCH OF THE INTEGRATOR STRATEGYMAERSK: FOCUS ON DEALS MAERSK: QUESTION TIME WITH FOCUS ON MSC AND DEALS
TSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNINGHON: GAUGE THE UPSIDEXPO: STELLAR EARNINGS DELIVERYMAERSK: DEMAND DISRUPTION RISKMAERSK: FOCUS ON MARGIN IN LOGISTICS AND SERVICESMAERSK: GROWTH UNDERPERFORMANCE IN OCEAN MAERSK: WHY IS GEMINI SUCH A GOOD IDEA MAERSK: INTEGRATOR STRATEGY MAERSK: EIGHT YEARS AFTER THE LAUNCH OF THE INTEGRATOR STRATEGYMAERSK: FOCUS ON DEALS MAERSK: QUESTION TIME WITH FOCUS ON MSC AND DEALS
Lloyd’s Loading List (LLL) reports:
Rising numbers of businesses seeking to shift their production activities from China to closer to home in the wake of the COVID-19 pandemic and growing geopolitical tensions could face costs of up to US$1 trillion over a five-year period, according to new research from Bank of America (BofA).
The US bank said the outlay was “significant but not prohibitive”, arguing that the re-shoring move would have beneficial effects in the long term, and that the COVID-19 pandemic had significantly accelerated businesses’ thinking and planning towards re-shoring supply chains.
Although other analysts have pointed towards a likely partial withdrawal from manufacturing in China by many international businesses, most likely starting with more politically sensitive and security-sensitive verticals, the BofA costing is for a total withdrawal. Its analysis “suggests that a US$1 trillion capex cycle, spread over a five-year period, would support the shift of all foreign manufacturing in China that is not intended for consumption in China”.
At the start of this year, before the pandemic took hold, BofA published the findings of a global survey in which it argued that supply chains for companies with a combine market capital of US$22 trillion were on the move.
“More importantly, in the first signs of reversal in a multi-decade trend, we found companies in North America were planning to ‘re-shore’ production. Although most of these planned relocations were small compared to their installed base, the breadth of the shift was striking,” the report revealed.
“At the time, we characterized these movements as ‘tectonic’ – slow moving, persistent with major changes to the business environment. COVID-19 has accelerated our calculus. Stepping back, global supply chains were built to maximize returns by optimizing labour cost arbitrage and lower overheads.
Fragile supply chains
“The pandemic has, however, exposed the fragility of far-flung supply chains and a fresh survey of our analysts reveals that companies in more than 80% of global sectors experienced supply chain disruptions during COVID-19.”
As a direct follow-on to these disruptions, three-quarters plan to enhance the scope of their pre-existing plans to re-shore production, it underlined…
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Previously on Premium: “Existential threats – supply chain near-shoring & geopolitical risk“
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