September 19, 2018

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Globalization getting reversed?

Reversing-globalisation

reversing-globalisation
Reversing Globalisation? Do you get confused? There was time when firms sourced, manufactured, and sold products locally— at the most within a country. Then came the wave of globalization — the move to source and manufacture at locations which afforded the maximum savings. Supply chains went global with a vengeance. This led to a dramatic increase in global trade. Across the world, trading blocs represent the recognition of this web of trade. We have products made in China, using components from across the world, sold in developed markets and supported from India. This was the driver of international trade. Between 1961 and 2013, growth in world trade averaged 10 percent. ln 2015, it was 2 percent. Recent developments show that global trade is reversing – the movement of goods is at a low. There is a huge overcapacity in shipping. Shipping a TEU from Shanghai to US now costs a tenth of what it was a year ago. It is cheaper to ship a container from Mumbai to Europe, than move it from Mumbai to New Delhi. Protectionism. is rising. The best example of this is the rise of Donald Trump — the Republican presidential candidate. His promise of bringing back iobs to USA is an extreme example of reversal of globalization. According to reports, the G20 has imposed 3581 measures that restricted trade – and over 2900 of them are still active. Leads us to ponder — is globalization under threat? ls the global supply chain under threat of regionalization? Will we see an unravelling of these supply chains? What will be the impact of this trend on supply chains? Supply chain professionals need to take a hard look at the forces that is reversing globalization. And dread Donald Trump winning the US presidential election. On a different note, we are organizing the second Demand Planning and Forecasting Forum and awards on the 13th June in Mumbai. You can catch the curtain raiser in this issue. I invite you to participate in this venture.

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