Introduction
The global supply chain is a lifeline of the modern world, connecting producers to consumers across borders, ensuring a diverse array of products is available, promoting economic interdependence, fosters innovation through cross-border collaboration, it also plays a critical role in the growth and stability of economies worldwide but in the vast world of global trade, the impact of geopolitics on supply chains is like a ripple effect from a stone thrown in a pond which sometimes affect badly and create disruptions such as war, sanctions, and hijacking attacks making the global supply chain more complicated.
Let’s set sail into the sometimes-choppy waters where global politics meets the journey of a product from where it’s made to where it’s needed.
Geo-Political Chess or Mess
Geopolitics is all about political relations and international affairs among nations. Choosing the side either it is left wing or right wing in a global event both impacts the involved parties and their results.
In the current scenario, according to a report from “Time of Israel”, attacks in the Red Sea have disrupted global shipping, prompting firms to reroute to longer and more costly journeys around southern Africa. There are concerns that the conflict in Gaza, ignited by brutal October 7 massacres by Hamas, could escalate and destabilize the broader Middle East.
The terror group claims it targets commercial ships to support Gaza amidst Israel’s conflict with Hamas, which was sparked by the terror group’s October 7 massacre in southern Israel.
A photo released by the Houthi Media Centre depicts Houthi forces boarding the cargo ship Galaxy Leader on November 19, 2023
The United States and Britain initiated strikes on Houthi targets in Yemen a month ago in retaliation for the attacks on Red Sea shipping, the U.S. government declared the Houthis as a terrorist group, but it has come to light that following this designation, the Houthis carried out attacks on ships bound for the United States.
Effects of Geo-Politics on the globe
1. The Shadow of War on Transportation
The Shadow of War on Transportation It is known that wars have long been disruptors of tranquillity, and their impact on transportation is profound. The world has yet to recover from the aftermath of the Russia-Ukraine war, in the meantime Israel-Palestine war has started new conflicts, these ongoing wars have sent shockwaves throughout the global supply chain, causing widespread disruptions and economic uncertainties as they significantly contribute to jams and delays in sea routes.
According to Freightify, the Black Sea region ranked as the world’s second-largest grain-exporting hub in 2021, boasting a cargo volume of 111.2 million tons. However, commercial shipping operations from Ukraine ceased following the bombings by Russian forces.
On the other hand, the threat of missile attacks from the Houthis to both inbound and outbound ship movements going to Israel and other countries has not only raised transportation costs but has also increased insurance costs for shipments. As a result, Cargo Shipments are forced to take longer routes, increasing shipment duration and freight costs.
2. Pirates on the Horizon
Before dive in further, it’s crucial to grasp the geography of major sea routes that intricately link the entire globe. Among these, the Suez Canal and the Strait of Hormuz emerge as vital connectors.
A photo released by the Houthi Media Centre depicts Houthi forces boarding the cargo ship Galaxy Leader on November 19, 2023
The Shadow of War on Transportation It is known that wars have long been disruptors of tranquillity, and their impact on transportation is profound. The world has yet to recover from the aftermath of the Russia-Ukraine war, in the meantime Israel-Palestine war has started new conflicts, these ongoing wars have sent shockwaves throughout the global supply chain, causing widespread disruptions and economic uncertainties as they significantly contribute to jams and delays in sea routes.
According to Freightify, the Black Sea region ranked as the world’s second-largest grain-exporting hub in 2021, boasting a cargo volume of 111.2 million tons. However, commercial shipping operations from Ukraine ceased following the bombings by Russian forces.
On the other hand, the threat of missile attacks from the Houthis to both inbound and outbound ship movements going to Israel and other countries has not only raised transportation costs but has also increased insurance costs for shipments. As a result, Cargo Shipments are forced to take longer routes, increasing shipment duration and freight costs.
A photo released by the Houthi Media Centre depicts Houthi forces boarding the cargo ship Galaxy Leader on November 19, 2023
A photo released by the Houthi Media Centre depicts Houthi forces boarding the cargo ship Galaxy Leader on November 19, 2023
The Shadow of War on Transportation It is known that wars have long been disruptors of tranquillity, and their impact on transportation is profound. The world has yet to recover from the aftermath of the Russia-Ukraine war, in the meantime Israel-Palestine war has started new conflicts, these ongoing wars have sent shockwaves throughout the global supply chain, causing widespread disruptions and economic uncertainties as they significantly contribute to jams and delays in sea routes.
According to Freightify, the Black Sea region ranked as the world’s second-largest grain-exporting hub in 2021, boasting a cargo volume of 111.2 million tons. However, commercial shipping operations from Ukraine ceased following the bombings by Russian forces.
On the other hand, the threat of missile attacks from the Houthis to both inbound and outbound ship movements going to Israel and other countries has not only raised transportation costs but has also increased insurance costs for shipments. As a result, Cargo Shipments are forced to take longer routes, increasing shipment duration and freight costs.
Conclusion
The global supply chain is grappling with disruptions caused by Geopolitics, War and Piracy. It is imperative for a coalition of nations to unite and put an end to these conflicts. The ongoing wars, whether between countries or religious groups, erect insurmountable barriers between borders, adversely affecting ordinary citizens and businesses. These conflicts also have a profound impact on the overall economic growth of nations heavily reliant on imports and exports. Without the smooth movement of goods, there is a risk of bringing the global economy to a standstill. Swift international cooperation is crucial to mitigate these challenges and ensure the uninterrupted flow of trade for sustained global economic stability.
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