Reasons to be cheerful: Supply chain professionals optimistic about 2024 (and beyond)
The recent report ‘The State of European Supply Chains’ produced by Reuters, found an overall improvement in sentiment across European supply chain professionals, expecting higher demand for goods and fewer major disruptions after years of huge black swan events.
So, what areas are supply chain professionals feeling most optimistic about, what’s still causing concern, and how are they responding to disruptions? Let’s take a look.
Optimism returns for 2024
The report shows an overall positive change in net sentiment across the sector, underlining rising confidence in the global economy: There was a substantial drop in the number of supply chain professionals expecting global demand for goods to decrease, falling from 45% in 2023 to 21% in 2024; those expecting stability jumped from 24% to 43%; and the share of businesses who sees global recession as a key risk fell from 42% to 34%.
Additionally, optimism is strengthened by the surprising decline in the concern about fuel shortages and rising energy costs, which were pushed to the absolute front of minds by the conflict in Ukraine. Those noting them as a major concern fell from 67% to 27%. But despite this returning optimism, the report found that ¬¬certain vulnerabilities remain in 2024.
Remaining vulnerabilities
Results from the study found that 71% of respondents have geopolitical instability as the top disruption on their minds. It’s no surprise when over half of British exporters and manufacturers reported some degree of disruption early this year.
At the forefront of the turbulence is the continued crisis in the Red Sea, which altered supply chains quickly and “underscore[s] a period of heightened instability” as Geanina-Lavinia Sincu, Regional Head of Lead Logistics Products & Cold Chain Management, Maersk Europe, states.
The effects of black swan events such as this, alongside continued armed conflict within Europe itself, is why geopolitical instability is seen as the defining risk.
Alongside geopolitical instability, other vulnerabilities persist. Worries over the risks of climate change and extreme weather jumped to 29% in comparison to 16% in 2023, ; fears over increases to tariffs and trade barriers increased to 27% from 25%, and transportation cost concerns rose from 19% to 23%.
Whilst optimism is returning to supply chains in 2024, we should remain cautious. Why? Because despite the positive outlook, the opening to 2024 has reminded us of the instability within international supply chains and the potential for disruptions to appear at any given time.
Maintaining resilience... at a cost
The report found that 12% of organisations were able to rapidly tackle disruptions in all cases and 58% in most cases. But this resilience came with a price. 70% of respondents said that, while they were able to rapidly resolve these major disruptions, these resolutions were more expensive than expected.
A further 61% said that the friction and delays introduced by these events meant they incurred more costs than they initially expected, and 16% found them much higher. Only 5% said they had achieved strong cost controls throughout these incidents.
These results show that while many European organisations have solutions to minimise the impact of disruptions, they still need to become more efficient and streamlined to prevent these incidents from heavily impacting the bottom line and overall margins. Industry experts believe that despite overall pressure reducing, rapidly changing consumer behaviour makes agility and flexibility essential for cost competitiveness and growth. And we agree that with a robust, agile supply chain solution, you'll be prepared to weather these storms.
The era of predictable unpredictability
Cautious optimism defines supply chain professionals’ sentiment for 2024 and beyond. Whilst a positive outlook is promising, ongoing and as-yet-unknown disruptions highlight the need for continued investment into supply chain management. With a supply chain that’s ready to adapt to the ever-changing demands of our environment, organisations can look forward with enthusiasm.
For more information on navigating supply chains, download the report:
With Maersk’s Lead Logistics Services, we plan and manage your logistics journey to take the complexity out of your supply chain. We offer integrated solutions that give you visibility across your supply chain operations while we synchronise inbound and outbound flows, streamline inventory and digitise processes. To find out more about developing a robust and responsive supply chain, contact us
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