How Resilient Are Global Supply Chains? A Look at the Risks

CGTN Europe

CGTN Europe spoke to Dr. John Glen, Chief Economist at the Chartered Institute of Procurement and Supply.

Transcript

00:00The conflicts between Israel and Iran is already rocking global supply chains, but just how resilient are they?

00:06Well, a new report looks at the risk of sourcing goods and materials from 30 of the world's biggest economies.

00:12It identified that Mexico, Turkey and Russia had the highest risk as countries because of political instability and weak compliance.

00:20The United States came 13th. The report says it's seen as more risky than countries like Brazil and South Africa

00:25because of geopolitical and climate-related risks, as well as labour costs.

00:30Safest region? Well, that was Europe.

00:32The report says it's a good place to source goods and materials from because of its relative stability and high levels of compliance.

00:39But this is reflected in higher costs.

00:42Well, let's talk now to Dr. John Glenn, who's chief economist at the Chartered Institute of Procurement and Supply in London.

00:49Good to see you, Dr. Glenn.

00:51So we, of course, have to talk about this escalating situation in the Middle East.

00:55What could that mean for global supply chains?

00:57Well, immediately in the Middle East, you've got two or three key supply chain lanes, if you like.

01:06You've got the Straits of Hormuz, via which much oil comes out of the Middle East.

01:12And obviously, that could have a significant impact on oil prices if the Straits were closed.

01:19You've obviously got the Suez Canal.

01:20And we've seen recently that attacks on shipping in the Suez Canal have forced shipping to go around the Cape and South Africa

01:28and have increased the amount of freight on the water and the length of time that it takes.

01:34And then perhaps the one thing that people are ignoring is Jabal Ali in the United Arab Emirates,

01:40which is the busiest port in the world if you take the Chinese ports and Singapore out.

01:45And obviously, closing down Jabal Ali would have a massive effect on global trade.

01:50And there's also the potential blocking of the Straits of Hormuz, isn't there?

01:55What difference could that make?

01:57Yeah, as I said, if the Straits of Hormuz were to be shut,

02:02it would stop oil, a significant quantity of global oil coming, being shipped out onto the markets,

02:08and that would significantly increase the oil price.

02:12Now you're actually talking oil prices towards $100 a barrel, if not in excess of it.

02:19Right, well, let's return to this report then, which put Mexico, Russia, India, Philippines and Turkey as the top five most risky places.

02:27What do you think put them there?

02:30Well, different things.

02:31What the report sought to do was look at the different elements that were causing risk in global supply chains.

02:38So if we take Mexico, a lot of that is geopolitical, it's to do with the tariffs,

02:43it's to do with the renegotiation of what older people used to call NAFTA and is now the USMCA agreement,

02:51which is up for renegotiation in 2026.

02:54And that whole free trade North American thing is under severe pressure

02:59because of the position the President of the United States has taken with respect to tariffs.

03:06If you were to look at Russia, obviously the risk there is war.

03:10With Turkey and India, it's aligning themselves with Russia and the impact that that has in terms of the geopolitics

03:17and who wishes to trade with them.

03:19And then if we look at the Philippines, the issue with the Philippines is what we call regulatory volatility

03:25in that the regulatory environment is not stable,

03:29and therefore organizations don't know the ground rules, as it were, when they're trading in the Philippines.

03:34Thanks.

03:35Thanks.

03:52Thanks.

03:53Thanks.

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