When conflict erupts on the other side of the world, it can seem like a far-off problem. It might not take long, though, for you to start feeling the effects.
Wars and conflicts are notorious for disrupting supply chains. That can drive up your costs and throw off your project timelines.
Understanding the impact of international conflict on supply chains won’t settle global disputes, but it can empower you to make time- and money-saving adjustments to your shipping procedures.
Fuel Costs
Many nations are dependent on other parts of the world for the fuel to power their ships, trucks and planes. The countries with oil may wield that power over others. They could choose to drive up prices or withhold fuel altogether.
As long as shipping depends on this natural resource, global conflict will have an outsized influence on the cost of getting items from one place to another. High shipping costs are sure to hurt your company’s profits. You may have to make hard decisions about what you source and where you acquire it.
When conflict drives up fuel prices, it becomes more important than ever to make sure you’re spending no more on shipping than you have to. Post audit services could help you identify overcharges, negotiate refunds from shipping companies, and save money going forward.
Political Decisions
Government leaders sometimes use any means at their disposal to influence other nations. When two countries are at odds, one may impose tariffs or sanctions against another. Even nations that aren’t directly involved in the conflict may get in on the action.
Such restrictions on imports and exports can make it hard for you to obtain the goods and materials that you need. Even if you can get a hold of your items, you may find that the cost of tariffs and other charges has been passed on to you. The skyrocketing prices are sure to impact your bottom line.
Inaccessible Routes
When conflict strikes, the trade routes you’ve come to depend on may suddenly vanish.
For example, an enemy nation might not allow shipments to pass through. That can especially affect trade by truck and train. There might be alternatives, such as shifting to ocean routes, but making the switch is a big job. Changes can’t always be made on a whim, and they might result in longer timetables or increased costs.
Ocean travel isn’t necessarily more conflict proof than land based trade. One country may block another country’s ports. If the ships can’t get out, the goods they carry won’t be going anywhere.
You can see a prime example of this in today’s world. Russian control of Ukrainian ports is keeping wheat supplies stuck in Ukraine. That’s a problem for food availability and prices around the world.
Missing Materials and Component Holdups
Manufacturers source materials from around the world. If they can’t get the materials they need, they can’t make their goods. Just one missing material can throw off an entire supply chain.
Keep in mind that supply chains involve a series of steps. As the name implies, each one is linked together. A holdup at any point could break the entire chain.
For example, making semiconductors requires an ample supply of silicon. If semiconductor manufacturers can’t get their hands on silicon, then they can’t produce semiconductors. When there are no semiconductors available, all sorts of other industries will stall as well.
Even if there’s silicon available, that doesn’t guarantee a smooth supply chain. Any holdup of the finished semiconductors — such as blocked ports or trade embargoes — could keep other manufacturers from being able to complete their projects.
Their holdups, in turn, could cause delays in other industries. What if, for instance, a shortage of semiconductor chips means that there aren’t enough new trucks on the road? Any company that counts on truck deliveries may find that shipments start taking longer and costing more money.
Temporary Solutions and Permanent Changes
When the supply chain solutions you’ve counted on for years fall apart, you may have no choice but to recalibrate. Putting new options into place takes time, though.
Once your original sources and routes become available again, you may have a decision to make. Should you go back to your old ways or stick with your new approach?
Making the switch back to your previous plans could create fresh upheaval. You might find yourself at the bottom of a waiting list. Your preferred schedule may no longer be available. Or, you might bump another company from its spot, causing disruptions for them. (And remember, one industry’s supply chain issues have the potential to ripple throughout many sectors.)
On the other hand, sticking with your new plans could put just as much of a burden on the supply chain. Shipping companies or component manufacturers that were counting on your business may find themselves short on work. Your new sources may have more demand than they can adequately meet.
There may not be any perfect solution to your situation. In any case, you can expect some bumps and struggles as you adjust to the impact of international conflict on supply chains.
How to Ride Out Supply Chain Disruptions
When international conflict throws off your supply chain, you can’t set the cost of fuel, lift tariffs or make raw materials magically appear. What you can do, though, is keep a close eye on your shipping costs and make sure you’re not paying a cent more than you have to. That sounds like a big job, but you don’t have to do it alone. Instead, rely on Trans Audit. With our team on your side, you can count on finding the best, lowest-priced shipping services for your needs, no matter what’s going on in the world.
