A war on the Korean peninsula would be unthinkable for global supply chains. “If Korea is hit by a missile,” Soo Kyoum Kim, of IDC Research told Bloomberg, “all electronics production will stop.” South Korea’s semiconductor manufacturers supply two-thirds of the world’s electronic memory chips, and it was the country’s indispensability to the global economy that earned it the title of “Asian Tiger” decades ago.
When President Trump turned the Twitter-hose on the hermetic state of North Korea in April, warning that the country was “looking for trouble” and allegedly directing military resources to the area, alarm bells began ringing at the headquarters of logistics companies that service the region.
With the powerhouse economies of China and South Korea on either side of the potential belligerent, the prospect of a conflict on the peninsula still has plenty industry bosses on edge. That same threat also warrants a more general discussion of what sort of threats political instability and protectionism pose to the logistics business, and, what steps companies can take to mitigate against these disruptions.
“You have a lot of friction between the U.S. and Russia, the U.S. and North Korea, and if something were to break out, it would have a huge impact on supply chains, because we depend a lot on Asia,” said Eugene Laney, head of international trade affairs at DHL Express. “The military buildup and the uncertainty about whether there might be conflict creates an enormous problem when we think about what we can do, and how efficient an effective supply chain could be,” he added.
Laney’s concerns about a conflict on the Korean Peninsula fit into a broader threat outlay that includes what Frank Appel, CEO of Deutsche Post DHL Group attributes in part to the “speed of change.” Weighing in on this socio-political dynamic, Appel said that, “many people feel overwhelmed and left alone. This is the perfect ground for populists with simple answers and new realities like the Brexit, the loss of TPP [the Trans-Pacific Partnership] or new walls.”
In the industry, these threats have been eclipsed by growing revenues and rising volumes. On the political side, the recent election of Emmanuel Macron suggests that voters still favor the E.U.’s brand of free trade. In fact, the gains keep coming, creating a counter-narrative to the warnings about protectionism, which already scuttled the TPP, produced Brexit, and could see the U.S. restricting free trade across North America. While there is a movement to build figurative and literal walls around nations, we are seeing signs that bridges are still being built via logistics to overcome these barriers.2 - Readers Like This Post