Technology can remove trade barriers and protect supply chains from shocks

Geopolitical instability in Europe and the continuing trade tension between the US and China may have eclipsed Covid19’s impact on world trade. Yet the underlying message from the pandemic remains: The supply chain infrastructure needs to become more agile to overcome the challenges of today and tomorrow, regardless of where in the world they stem from.

The free flow of goods and information across borders is entirely dependent on stable relationships – and, to some extent, climate conditions.

However, a number of factors are responsible for greater mistrust between countries, with the Ukraine war exacerbating the situation. As a result, the world’s supply chains, built on a free-flowing model, need to keep up with the needs of businesses and customers alike. Yet, change is already afoot. Up to 20 per cent of leading UAE executives cite trade shocks and inflation as the main barriers to growing exports this year, according to our Trade in Transition research.

DP World’s annual research, conducted in partnership with Economist Impact, has highlighted a marked shift towards regionalisation and reshoring (returning the manufacturing of goods to the company’s original country), with 24 per cent of respondents saying they began to regionalise last year, compared with 13 per cent in 2021, while 21 per cent are reshoring, compared with 8 per cent in 2021.

Emirati companies are also diversifying their supplier base as they strive to increase resilience and enhance cost optimisation.

But how can our region ensure these changes are resilient and bring long-term value? The past few years have shown us that traditional globalisation is being redefined by reshoring, with major companies moving manufacturing closer to home markets to enhance the reliability of shipping supplies across sectors and borders.

DP World has been at the centre of this shift, creating regional centres and port-centric capabilities to store inventory while diversifying transport routes. This adds further resilience by ensuring goods are nearby and always have several dependable options available.

At the same time, we cannot isolate communities and companies that rely on access to all parts of the world, which is why we strive to improve the physical and digital trading infrastructure.

Ensuring supply chains remain agile to global conditions, we have to utilise technology, which is where the UAE is a world leader. At our head office in Dubai and in our offices in India, we have been investing heavily in the solutions that aid greater communication between shorter, localised supply chains and global ones.

This visibility is fundamental to strengthening resilience for trade, both in the short and the long term. Programmes such as DP World’s Cargoes suite are streamlining every step of a cargo’s journey along a supply chain.

In an era of greater regionalisation, this tool can be used to better manage customer expectations and make more informed, cost-effective decisions regarding inventory, as well as adapt services accordingly where necessary.

As our research highlights, the use of digital tools for inventory management is the most effective supply-side resilience strategy, with 35 per cent of companies now using advanced technology to improve resilience in their value chain, compared with 31 per cent last year.

Geopolitical tension is challenging but it will always exist in some form.

By shortening supply chains or removing barriers for global trade through technology, we can protect our economies, generate prosperity and, ultimately, protect global value chains from future shocks to the system.

The use of digital tools for inventory management is the most effective strategy to build resilience on the supply side