Combating the Growing Risk and Uncertainty of Global Trade

Globalization has been going on for a long time, but it continues to morph and shift in different directions. When you look at recent developments, like Brexit and the trade views of President Trump, do companies need to approach globalization differently moving forward? Are the rules for success the same or different than in the past?

“Globalization for any growth-oriented company represents a significant opportunity, but it obviously comes with a tremendous amount of associated risk,” said Matt Castle, VP of Global Forwarding Products and Services at C.H. Robinson in a recent episode of Talking Logistics. “Whatever has been a recipe for success in the past is certainly not a guarantee as we go forward. We are clearly entering a time of some volatility in the marketplace that people need to be very cautious about and aware of as we proceed ahead.”

How do you combat this growing risk and uncertainty?

“You have to build strong relationships across your supply chain,” said Castle. “If there’s ever a time for that statement to hold true is in today’s environment, without a doubt.”

Castle also discussed the importance of supply chain design and simulation — that is, asking “What if?” questions, such as what if NAFTA gets renegotiated or border taxes get implemented on imports, and analyzing the potential impacts each scenario might have on supply chains and developing different actions to take in response. He pointed to his own organization as an example:

“We’re a sizeable broker in the U.S. and when we look at the profile of our entries, 45 percent of them are somehow affiliated with NAFTA. When we look at our cross-border activity, 90 percent of it has some affiliation with NAFTA. If you start to change that landscape in any way, shape, or form, it’s going to have an impact. To your point, understanding that impact, having a contingency plan in place, and asking those “what if?” questions is absolutely critical as you think about how to best position your organization in that new light.”

Shifting gears, Matt and I discussed other important supply chain trends, including the ongoing growth and impact of e-commerce, especially the rise of cross-border e-commerce and how it’s driving demand for air freight. He also talked about another factor that companies need to keep on their radar screen: fuel costs. As he elaborates in the short clip below, “fuel has been a non-factor the past couple of years, but based on recent actions by OPEC and other developnents, it’s something to keep a tab on.”

I encourage you to watch the rest of my conversation with Matt for additional insights and advice on important supply chain trends for this year. Then post a question or comment and keep the conversation going!