The coronavirus pandemic is leading many business to shorten supply chains in response to difficulties obtaining materials sourced from distant places, a speaker at an industry forum said last week.
“Across the world what COVID has done is it’s made companies and countries think to themselves, ‘We don’t want to be dependent on one supplier,’” Rebecca Harding, CEO of Coriolis Technologies, said during a panel discussion during last week’s ICIS Asian Base Oils and Lubricants Virtual Conference. United Kingdom-based Coriolis Technologies provides data and analytics about trade and trade finance.
This trend is going to affect China and other parts of the world, Harding said, because it means supply chains are going to be distributed across the world and across regions of the world on a more diverse basis. Companies in many types of industries have encountered difficulties obtaining materials that were sole-sourced from countries such as China, she said.
She cited as an example a situation where the chairman of Jaguar Land Rover went to Shanghai, China, to pick up parts for Jaguar Land Rover components and brought them back to the United Kingdom in a suitcase. “That’s how dependent on these inventory stocks we were at the time,” Harding said.
“That’s pushed regions back on themselves and increased the amount of nationalism and protectionism that we’ve seen,” she said. “So 95 countries around the world – many of them across Asia and North America, everywhere actually except Germany – have imposed export restrictions on COVID-19 related sectors, but also as well now increasingly on technology-related sectors.”
She explained that to defend against concerns of relying too much on a single supplier, there is growing interest in intra-regional trade.
“So that’s an important trend,” Harding said, adding that the trend can be seen in North America, Africa and the whole world.
Regions are deciding to essentially become more dependent on themselves for supplies, she noted. “More supply chains are distributed within regions and countries, reducing this sort of globalization trend to some extent,” she said.