Global supply chains will come under pressure in coming months as ongoing trade uncertainty prevails. This is according to Johannes Hangl, a solution consultant at US-based global trade management solutions company Amber Road, who said that the growing trend to digitilisation was adding further pressure. Speaking during a webinar on trends for 2019 Hangl said global trade was at present growing faster than global GDP due to the benefits it offered to all the parties in the trading eco system. “The effect of the China trade battles are, however, leading to unexpected consequences and outcomes. Some predict consumer spending will slow down and retailers may be hit hard by the end of the year. The European Union (EU) Commission has also backed down on the level of growth expected in the next two years from their original growth forecast.” According to Hangl the two biggest uncertainties this year are the fragile China/US relationship and Brexit. “In the middle of the breakdown in the ChinaUS trade relations and the ongoing trade war, the rest of the world is making trade moves that will insulate them from uncertainty,” he said. “The UK is attempting to strike deals with the US, China and many other countries to shelter its
economy during the Brexit. This trade uncertainty and disruption affects every company and industry and often not for the better.” The global trade uncertainty, said Hangl, came with a hefty price tag as it was driving up the cost of raw materials, manufacturing, transportation, duties and tariffs. “Already in the US we have seen automotive manufacturers issue warnings that the new tariffs delivered by the Trump administration will increase production costs which will raise vehicle prices which in turn could potentially reduce sales which in turn could lead to worker force layoffs.” Also in China, said Hangl, production numbers were dropping and factory activity was lower than expected. He said expectations of increased protectionist behaviour by countries was expected in the coming months and advised companies to remain cognisant of the increased
cost that this brought. “We are hoping, however, that 2019 can be the year of normalisation.” He said with Brexit looming at the end of March uncertainty would prevail in the European markets as it was becoming impossible to make any predictions about the situation which was changing on a near daily basis. But, he said, this could also have real cost impacts on businesses across sectors and needed therefore to be watched and monitored closely. “Companies are going to have to focus more on smart end-to-end product and supplier lifecycle management. Across the world there is pressure to see more streamlined processes as companies try to stay ahead of the competition while keeping costs as low as possible.” Digitilisation, said Hangl, would remain a trend for years to come and removing manually intensive processes from the supply chain was of increasing importance. Improved communication, faster delivery and cost saving was what it was all about. “We are going to see more collaboration not only along, but between supply chains,” he said.
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Already in the US we have seen automotive manufacturers issue warnings that the new tariffs will increase production costs which will raise vehicle prices. – Johannes Hangl
