A global report on Supply Chain and shipping industry trends in 2023 says that 67 per cent of respondents consider India and Vietnam as attractive alternatives for China plus one strategy. The respondents believed that both countries will rise as functioning container shipping hubs in 2023 and change the existing layout of the global shipping industry.
The US coined a buzzword for the industry - friendshoring - referring to the process of relocating supply chains to countries that are ‘friends’ or allies of each other. The objective seems to be to prevent countries – especially China and Russia in the case of the US – from using their market advantages in key raw materials, foods and products.
Apple wanting to reduce its dependence on producing iPhones in China and exploring India as an alternative is an example, as with Foxconn expanding production facilities in Vietnam. However, it will take several years to move capacity out of China. The US itself continues to depend on China for hundreds of critical goods including textiles, chemicals and electronics, says a report by Germany’s Container xChange, which highlights global trends that the shipping and supply chain industry will witness in 2023.
In the report, 88 per cent of the respondents fear that the biggest impeding factor for businesses in 2023 will be inflation and recessionary fears, followed by ‘implications of war’ (57 per cent), ‘impact of Covid in China’ (53 per cent) and ‘worker strikes’ (23 per cent).
“The overall outlook for the year 2023 for the supply chain industry remains challenging. Europe is hit hard with all-time high inflation; China struggles to cope with the virus and the US continues to witness hinterland transportation challenges and labour unrest. Most of these challenges will stay in 2023. Consumer confidence will pick up, but it really depends on whether we witness more disruptions in the coming times.” said Christian Roeloffs, co-founder and CEO, Container xChange, an online container logistics platform.
Most of the experts surveyed foresee that inflation and recession will have a greater impact this year and will be the biggest driver of disruptions.
‘‘Due to inflation increasing, there’ll be more unrest in the labour market which will certainly lead to more strikes, specifically in Europe, the UK and North America. And as we have seen before, strikes result in slow operations within the port which can exacerbate supply issues,’’ said Aamir S. Mir, Chief Operating Officer (COO), Caspian Container Company SA.
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The report covers the growing expectation of the 3PL (third-party logistics) market to solidify in 2023. Reportedly, it’s projected to reach $1,789.74 billion by 2027. Another key trend on the list is the digital transformation of the industry. In the years to come, the adoption of digital technologies in shipping will focus on vessel schedules, intuitive booking interfaces, instant slot booking, and capacity confirmations. In this regard, the industry’s major concern will be on having systems interact directly via automating the Data-Analysis-Decision-Action cycle.