Discussions on the weaknesses of supply chain and transport infrastructure exposed by Covid-19, the importance of supply chain resilience, diversification, and sustainability. Exploring the concept of reshoring and China's role in global manufacturing. The benefits of adopting a push model in container operations and investing in digital processes for enhanced supply chain efficiency. Surprising aspects of the pandemic's impact on the supply chain process, including the significance of containers and the coexistence of human presence and automation.
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Quick takeaways
Covid-19 exposed weaknesses in the supply chain, highlighting the need for supply chain resilience and investment in transport assets like roads, rail, ports, and export terminals to create a more efficient system.
The pandemic-induced strain prompted companies to diversify supply chain sourcing and destination selection, focusing on security of supply alongside cost and sustainability, leading to significant investment opportunities in infrastructure expansion, decarbonization efforts, and technology solutions.
Deep dives
Supply Chain Resilience and Fragility
The modern supply chain system, which provides goods to consumers quickly and efficiently, is shown to be remarkably fragile during the pandemic. The interconnected nature of the supply chain, involving facilities, ports, ships, rail, trucks, distribution centers, and fulfillment centers, leaves room for numerous single points of failure. Supply chain resilience has become a prominent topic as businesses and consumers experienced supply disruptions and delays. The pandemic-induced strain exposed weaknesses, prompting companies to prioritize security of supply, alongside cost and sustainability. The shift in focus requires careful planning and adequate investment in transport assets, such as roads, rail, ports, and export terminals, to ensure a more resilient and efficient supply chain system.
Diversification and Decentralization
The pandemic highlighted the need for diversification in supply chain sourcing and destination selection. Companies are reevaluating their reliance on a single manufacturing hub like China and considering alternative locations like Southeast Asia or parts of India. In addition, there is a growing emphasis on destination diversification, where port choices are influenced by various factors, such as production capacity, tariffs, geopolitics, and convenience. This shift in approach to supply chain management reflects a sea change in priorities, with security of supply taking precedence alongside cost and sustainability. Companies now actively engage in the supply chain process, seeking to understand and optimize every step to mitigate future disruptions.
Investment Opportunities and Infrastructure Development
The current trends in supply chain resilience, diversification, and decentralization present significant investment opportunities. Infrastructure expansion is required to support the growing demand and transportation efficiency. Billions of dollars need to be invested in ports, rail networks, warehousing capacity, last-mile trucking fleets, and vessels. Additionally, the massive decarbonization effort necessitates significant capital to develop sustainable transport infrastructure. Companies are also exploring technologies and digital solutions to optimize utilization of existing space, improve visibility in the supply chain, and enhance efficiency. This multi-decade investment boom calls for strategic investments to meet evolving supply chain needs and capitalize on the changing dynamics of global trade.
Covid-19 exposed long-standing weaknesses in the supply chain and transport infrastructure. Dave Joynt, Managing Partner in Brookfield's Infrastructure Group, and Peter Stone, a Senior Vice President at Brookfield focused on portfolio management, discuss the need for supply chain resilience and transport assets like roads, rail, ports and export terminals. They tell us what the outlook is for these industries, why these assets are so important and where the opportunities are.
