SUPPLY CHAIN STRATEGIES IN POTENTIAL CONFLICT ZONES By Ron Atapattu
As tensions continue to escalate between the US and North Korea, policy makers and strategists are beginning to anticipate the potential for disruptions in the East-West supply chain. A situation that could put at risk the emerging economies of the Pacific Rim as well as the United States. The potential for billions of dollars in lost revenue worldwide has so far, been ignored by the news media and politicians as they focus on the immediate security threat proposed by the provocative acts of Kim Jong-un.
Should hostilities actually breakout, the economies most likely to be initially disrupted will be South Korea and Japan. However, this would only be the beginning, as the interdependence of trade between all of the countries in this region would result in a ripple effect around the world.
China, Japan and South Korea are the largest US trading partners in the region, providing manufactured goods and raw materials totaling over $800 billion dollars. South Korea is the 5th largest importer of American agricultural products and a net exporter of electronics to the United States. Much of the South Korean infrastructure supporting this trade, as well as consumers who create the demand for United States imports, are at financial risk from any military conflict.
“ The possibility of war in the region is a serious concern for everyone.” states Ron Atapattu, President of Overseas Cargo, Inc. “Supply chain strategies by manufacturers, suppliers and shippers are planned months in advance to accommodate shipping routes, compliance issues and normal contingencies associated with international transport. Built into the supply chain cost is the future selling price of goods, shipping costs and margin fluctuations. Insurance carriers must also bear the burden of liability and have to adjust their plans and policies in estimating risk exposure. The immediate challenge for 3PL providers is to develop multiple contingency plans and strategies that are designed to mitigate disruptions to their customers’ supply chain and account for any related increase in costs."
Overseas Cargo, Inc., (ShipOCI.com) one of the country’s leading 3PL providers are already underway in logistics operations for the early stages of it’s holiday shipments.
“Our customers are dependant upon the shipment and delivery of holiday goods. Our emphasis right now is to get these shipments out early in the event of potential disruptions in the Asian chain or shortfalls in production”, continues Atapattu. “ This is actually standard operating procedure for our company. We’re constantly monitoring all of our shipping routes and forecasting the needs of our clients and potential weaknesses that could occur in their supply chain. Our team has previously established, through back channels, alternate shipping routes in the event of temporary disruptions due to weather, political or labor disruptions. We’re confident that we can minimize any potential interruptions in our customer’s supply chains as the situation continues to unfold. We recommend that companies review their current supply chain schedules, projected year end sales forecasts and margin targets to identify those areas most susceptible to disruption. Early assessments of your supply chain can help avoid or at least minimize potential losses due to the most common causes of interruption or full scale conflict on the Korean Peninsula.” ...