The respondents represented the chemical (62.1%), diversified industrial (12.1%) and consumer/retail (10.3%) industries, and were based in North America (39.7%), Europe (31%) and Asia/Pacific (24%). Nearly 70% represented companies with more than $10 million in annual revenues.
"With supply chain professionals on the front lines of international trade experiencing the impact of the global recession and growing protectionism, the timing was right to learn how they are aligning their priorities to manage the crisis," said Richard J. Bolte, Jr., president and CEO of BDP International, a leading global logistics and transportation services firm, which conducted the survey in conjunction with its Centrx supply chain consulting unit; Adler Research, Bethlehem, Pa.; King’s Road Consulting, Philadelphia, Pa; and Rubicon Consulting Pte Ltd., Singapore. "The fact that 17 G20 members and other countries have implemented nearly 50 measures restricting trade since last November has dramatic implications for global supply chains. We wanted to get a better understanding of what the implications are for our customers and others, and how they may play out in the coming years."
Significantly, 84.2% of the respondents agreed that a rise in protectionism could turn a global recession into a global depression, with 60.3% agreeing it will cause a collapse of globalization. In terms of its impact on their own companies, 20.7% said it would result in a significant reduction in export activity and an even deeper slowdown in business. And 17.2%, primarily North American respondents (26.1%), see protectionism contributing to an increase in the cost of materials sourcing.
In addition, nearly half (47.3%) said their companies are placing greater emphasis on near-sourcing to reduce supply chain costs. This appears to correlate with their concern over reverse globalization, volatile fuel costs, reducing their carbon footprint and other factors such as supply chain security and regulatory compliance, according to BDP’s Bolte.
Other concerns that registered high on the survey were tight lending practices which are curtailing availability of trade financing and a prolonged reversal in global trade. More than half of the respondents also feared massive unemployment, with Americans expressing the most concern and Europeans the least, reflecting differences in the regions’ labor laws and social safety nets.
Respondents’ biggest near-term priority with regard to their sourcing, logistics and supply chain practices was cost-based selection of transportation modes among rail, barge and truck for domestic transport, and ocean and air carriers for global transport (81%). Renegotiation of transportation contracts, signed as recently as several months ago and no longer reflective of current supply-and-demand conditions, was also a near term priority (57%).
In terms of both near- and long-term priorities, more than 60% of the respondents said their companies are placing greater emphasis on supply chain visibility, indicative of their need to further optimize these networks to reduce spend, and gain greater control over their transportation and logistics activities.
As noted, North American respondents were quite concerned about the impact of governments’ protectionist policies on their cost of materials, as well as their effect on unemployment. European respondents were more worried about the disappearance of emerging markets, both from a sourcing and export perspective. By contrast, Asian respondents registered concern over the closure of more efficient plants in the wake of reverse globalization. This was punctuated by apprehensions that their companies are looking at near-sourcing to reduce supply chain costs (71%), compared with 45% of North American and 31% of European respondents.
Significantly, more than 70% of the respondents felt that economic stimulus packages would help their countries recover from the recession. However, only 55% of the North American respondents agreed the stimulus will help, suggesting uncertainty over the political risks of these ambitious programs and a growing sense of stimulus fatigue.
In summary, the survey underscores the broad-based concern among global traders that a sharp increase in protectionism could result in dire consequences, including a depression and resurgence of economic nationalism that could hobble the global economy for years, if not decades, to come.
