News #100 - 'Clear winners and losers' as global supply chains are rebalanced

23.02.2025

Industry’s decoupling from China is set to continue to the end of the decade, according to today’s emerging markets logistics index by Agility and Transport Intelligence (Ti), with “clear winners and losers” emerging.  

In a survey of more than 550 trade and logistics industry professionals, 54% said they intended to move a part of their production and/or sourcing out of China by 2030 – a 16.6% increase on last year’s survey response.  

“A very clear indication that logistics professionals are trying to balance risk and reward in an era of volatility,” it said. 

Of them, 14.2% cited the China-US trade war as the primary reason for the move, and more than 80% of all respondents considered the impact of tariffs on their supply chains to be significant (47.3%), or very significant (34.5%).

“Companies dependent on Chinese manufacturers will face higher costs and could accelerate the trend toward regionalised supply chains. In this instance, smaller firms may struggle to adapt to these disruptions, leading to consolidation,” it said. 

Further, 11.7% cited rising labour costs as their primary reason to move away from China; 11.3% blamed increased domestic regulation and 10.7% said it was simply to diversify their supply chains. 

“As [China] transitions from low-cost manufacturing to a more sustainable and better regulated economy, businesses are feeling the pinch,” explained the report. 

“Combined with heightened global scrutiny, many companies see this as a tipping point, prompting them to diversify or relocate their operations to regions offering cost savings, less-stringency, and geopolitical stability,” it added.  

However, China’s scale, expertise, and infrastructure – difficult to replicate elsewhere – mean companies will likely “maintain access to China for its efficiency and move to other regions for resilience”. 

The survey examined the inflow and outflow of investment into regions to understand where companies were relocating to, and found North America the top beneficiary of reshoring trends with +12.9%, “driven by proximity to end markets, strong infrastructure, and supply chain resilience needs”. 

Sub-Saharan Africa gained traction with +9.9%, “because of its low costs, abundant resources, improving infrastructure, and growing and untapped ecommerce market”. South-east Asia saw +4.9%, Latin America +2.7%, and Europe “remained stable” at +0.4%.  

Surprisingly, traditional hubs were facing challenges, it said, and India reported the largest net outflow, of -31%, “driven by rising costs, regulatory hurdles, and infrastructure issues”. 

Indeed, 18.3% of respondents cited “corruption” as the biggest barrier to investment in India, an increase of 3% on last year’s survey – “enough to suggest the problem is chronic, rather than acute. How that is tackled remains to be seen”. 

And 16.4% said “bureaucracy and red tape” was the most off-putting factor against investing in India, and 11.4% reported high tariffs.  

MENA also saw a net outflow of -4.7%, “reflecting geopolitical risks and the fact that it doesn’t compete effectively with other production hubs”.  

The report summed up: “The data shows an industry that is intent on diversification and adaptation. Emerging regions like Sub-Saharan Africa and Latin America are capitalising on their untapped potential, while conventional hotspots such as North America and Europe maintain stability. 

“On the whole, the global supply is rebalancing, with some clear winners and losers emerging.” 

Source: https://theloadstar.com/clear-winners-and-losers-as-global-supply-chains-are-rebalanced/

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