For several years now it has been necessary to view UK supply chains as entirely integral with a wider concept of a global supply chain. In many ways, with global trade barriers at their historically low levels, free trade was booming and seemingly borderless. But what’s in store for 2017?
2017 might be the year this landscape starts to change to some degree. 2017 for the Supply Chain is probably best described as the ‘Year of the Unknown’. Here’s why.
The Post-Brexit Trump-Dominated World
The initial fears over the impact of Brexit on the UK supply chain had begun to bed down with hopes that the impact on the supply chain would in reality be minimal. Businesses reliant on EU-centric supply chains have believed that if countries like Norway and Switzerland could do it, so could we. This may still remain the case. But with Article 50 still up in the air, we’re yet to see what the supply chain and trade landscape with the EU will be in 2017.
Then there’s the massive changes afoot Stateside that are likely to have far-reaching consequences, since Donald Trump’s election. With Trump taking office in January, there will be a considerable period of unknown, when campaign rhetoric begins to get formulated into real actionable policy. However, if the campaign is something to go by then global supply chains are going to undergo a massive seismic shift due to a souring of relations between the US and Mexico and China. The knock-on effect of this is that the total flow of goods across borders is likely to run into higher costs.
Borders Will Matter
Effectively there is a possibility that national borders are going to matter to trade and supply chains in a way they haven’t for a long time. Those global trade barriers will still be relatively low compared to history, but borders are going to become much more important in terms of strategic partnerships. Established and new strategic partnerships are going to shift and change as the inter-relationships of the US presidential change – and Brexit – start to play out.
Supply chains are going to have to increasingly look to the political landscape for their cues, particularly the interplay between the UK, EU, Eastern Europe and Russia, as well as the US and its relationships with China and Mexico.
Oil and Gas
Alongside the political landscape lies the impact of oil and gas prices on the supply chain. The latest headlines state that oil prices are continuing to stay low (www.reuters.com). Watching the developments in the oil and gas prices will also affect the supply chain as will, notably, Trump’s approach to terrorism and the Islamic State.
What The Future Looks Like for Supply Chains
As far as Supply Chains are concerned this means that changes are likely from manufacturing costs, to procurement and sourcing. However, the global marketplace has received a huge shake-up on the back of Brexit and Trump, and it’s yet to be seen how this will in reality affect the supply chain and British businesses.
It’s essential to rely on the experts in a changing global marketplace. Contact the team at Paul Trudgian to discuss getting expert supply chain support.