Get Set For A Bumpy Trade And Logistics Ride In 2019

A significant reshuffling of the top logistics countries is likely this year, largely because of Brexit and the potential for a trade war between the U.S. and China.

The World Bank’s bi-annual logistics performance index, released last month, had Germany on top – as usual – and the United States at No. 14. European countries dominated the rankings, holding the top four spots, eight of the top 10, and 13 of the top 20. China came in at number 26, up one spot from 27 in 2016. Mexico was number 51. The United Kingdom was at number 9 – but does anyone believe it will remain in the top ten as the fallout from Brexit plays out?

While Britain is still struggling with a “deal” or “no deal” approach with the EU, no matter how it plays out the March 29 exit deadline looms, and supply chains will be up against it in the short and long-term as they scramble to adjust.

Lloyd’s Loading List reports the European Union’s contingency plans in the event of a “no deal” Brexit, “do not alleviate the UK logistics industry’s serious concerns about the likelihood of major disruptions to supply chains and the flow of goods,” according to the UK’s Freight Transport Association (FTA). The current plans “only provide limited facilitations, confirming that leaving the EU without an agreement in place will have serious consequences for logistics, and in turn, integrated supply chains and the EU and UK economies.”

At the moment no knows what happens next with Brexit except that it will be messy and costly for logistics operators.

Just a Reshuffling? Or an Outright Decline?

More food for thought: McKinsey & Company’s Economic Conditions Snapshot for December – a survey of executives from around the world – revealed a steep decline in economic conditions globally last year. “Respondents’ assessments of conditions in their home economies have become gloomier throughout 2018, and respondents are now more likely to say conditions in their countries have declined than to say they have improved,” the report says. More than one-third of those surveyed in North America say their countries’ economies are worse than six months ago, up from 14% who said so in the previous survey. And in developed Asia, nearly half of respondents say economic conditions have worsened, compared with 27% in September.

Looking at 2019, a growing share (42%) of the McKinsey respondents expect conditions in their countries to decline over the next six months. That’s the highest percentage since April 2009, during the Great Recession.

So, it’s probably time for organizations and their supply chains to prepare not only for “post-Brexit,” but also for the real possibility of a recession.

It’s becoming more and more apparent that collaboration within companies and with their suppliers and supply chains is more necessary than ever. Why? If the boat starts to sink, it’s better to have trusted partners in the boat, all willing to work together to bail water and row to safety.