2024 has been a mixed bag for the international trade and transportation industry, buffeted by shocks emanating from various geopolitical, policy, and economic factors. At KlearNow, we wrote a forecast of the trends that would materialize or accelerate in 2024, and looking back, it has been largely proven right.
The industry continues to grapple with the effects of the Russia-Ukraine conflict, the ongoing hostilities in the Middle East, and the lengthening Red Sea crisis. The latter has created several operational challenges to maritime movement, as carriers are compelled to route vessels across the Cape of Good Hope to circumvent the risks of Houthi rebels attacking their vessels.
Protectionist policies and the imperative to diversify manufacturing and sourcing origins have reconfigured traditional bilateral relationships and altered trade flows, necessitating the redesign of trade networks and supply chains.
While some of those trends will remain strong in 2025, we’ve identified a few new trend headwinds.
With this background, we will explore the top trends and factors that are expected to have a material bearing on the compliance, logistics, shipping, and global supply chain sectors in 2025.
Top Trends Expected to Impact Global Trade in 2025
1. Military Conflicts and Supply Chain Disruptions
Given the widening theatre of conflict in the Middle East, with more countries being dragged there, the chances of an early resolution are bleak. Therefore, vessels are likely to continue sailing around the entire length of the African continent. This Cape of Good Hope routing is not only longer but also more expensive (primarily due to increases in bunker costs, charter expenses, and crewing charges).
Due to the longer sailing distances and higher costs, supply chain reliability will be affected. Growing hostilities among different blocs will also invite more sanctions on countries, which will continue to impact businesses’ sourcing operations. Diversification will continue to be a top priority for companies, both in finding new manufacturing partners and export destinations.
2. Labor Strife at US and Canadian Ports
While the threat of a protracted strike was averted at US West Coast ports, a labor strike at US East Coast ports is very real.
Though the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) ended a three-day strike in Oct. 2024, following a temporary agreement on wages, the interim agreement is valid until Jan. 15, 2025. With both parties not seeing eye-to-eye on the issue of port automation, there is a high possibility of the strike happening right on time when the new US administration takes over.
The situation is equally grave at Canadian ports, where Unions in Montreal and British Columbia have challenged the federal labor minister’s back-to-work order.
If negotiations remain inconclusive, the ensuing labor action will cause extensive supply chain disruptions. Vessel congestion and cargo backlogs will cause delays and higher costs.
3. Trump’s Presidency
With Donald Trump’s second presidential term just a few weeks away, importers and trading partners are anxious about the effect of his policies on international trade. The impact of proposed measures, including a tariff of 10% or more on all American imports and additional restrictions on Chinese imports, could be far-reaching. These measures could result in retaliatory tariffs from other countries, making it difficult to quantify their magnitude.
What is certain is that regulatory and policy changes will increase the costs and complexity of doing business, further complicating global supply chains.
4. Extreme Weather Events and Environmental Regulations
As climate change alters weather patterns across the globe, international shipping and logistics face the brunt, as droughts afflict key maritime routes.
Over the past couple of years, key maritime trade arteries such as the Panama Canal and the Rhine River in Germany have suffered from low water levels, reducing the draught and hence restricting the size, weight, and capacity of traversing vessels.
The Panama Canal Authority was compelled to reduce the number of daily vessel transits for a considerable period due to low water levels. While the situation reverted to normalcy during the course of 2024, it highlights the risks posed by the vagaries of weather.
To reduce the carbon footprint of the shipping industry, various governments have introduced legislation that enforces the usage of clean fuel and emission limits. More locally, states like California are pushing for tighter emissions regulations, which can be extended to other states once communities start appreciating the benefits. Ultimately, all this would increase the cost of freight operations, as stakeholders will have to invest in new equipment and low-emission assets.
While the current market volatility has pushed the spotlight away from weather events and environmental regulations, these factors will remain critical for supply chain planners in 2025.
5. Sustainability and ESG Efforts
Sustainability and Environmental, Social, and Governance (ESG) efforts are increasingly becoming focal points for supply chain organizations. As consumers become more environmentally conscious, businesses face mounting pressure to reduce their carbon footprint and adopt sustainable practices.
Supply chain organizations can enhance their sustainability by implementing green practices such as reducing energy consumption, utilizing renewable energy sources, and establishing recycling programs. Sustainable sourcing practices, which prioritize the procurement of materials from environmentally responsible suppliers, also contribute to a greener supply chain.
Adopting a circular supply chain model, which emphasizes the reuse and recycling of materials, can significantly reduce waste and promote sustainability. Additionally, improving labor practices by adhering to fair labor standards, ensuring safe working conditions, and fostering diversity and inclusion can bolster a company’s ESG efforts, making it more attractive to socially conscious consumers and investors.
6. Risk Management and Resiliency
In an era of frequent supply chain disruptions, effective risk management and resiliency are critical for ensuring business continuity. Considering supply chain disruptions can arise from various sources, including natural disasters, geopolitical tensions, and cyber-attacks, businesses are increasingly wary and looking at risk mitigation strategies.
Building resilient supply chains involves adopting agile and flexible models that can quickly adapt to changing market conditions and disruptions. Having visibility into trade data will help companies stay on top of tariffs and regulations, allowing them to react quickly to changes.
Supply chain visibility into freight movement is another key component of resiliency. More companies are pushing for real-time tracking and monitoring, as it enables them to identify potential disruptions early and take proactive measures to mitigate their impact. This not only ensures smoother operations but also strengthens the overall resilience of the supply chain, enabling businesses to navigate uncertainties with greater confidence.
Greater Role of Technology in Supply Chain Resilience
Technology solutions that leverage artificial intelligence (AI) and machine learning are growing in numbers, helping bring unprecedented efficiency and precision to supply chain operations. By automating repetitive and labor-intensive tasks such as data entry, inventory management, and demand forecasting, AI enables supply chain organizations to streamline processes, reduce costs, and enhance customer satisfaction.
Within the customs clearance vertical, the raft of legislative changes and revision of tariffs and duties will be difficult to keep pace with and will inevitably result in human errors, resulting in inadvertent violations. Here, technology like intelligent document processing (IDP) can help importers and customs brokerages manage trade data and stay on top of documentation required to stay compliant with regulations.
Incorporating logtech solutions like KlearEngine can help importers and customs brokers to ensure that all documentary requirements are completed, customs processes are followed, instances of misclassification and misdeclaration of goods are minimized, and customs violations are avoided.
Tackling Global Trade Uncertainty With KlearNow
KlearNow.AI has been the preferred solution for customs brokers and importers seeking to address market and regulatory uncertainty. In trade compliance and supply chain management, its AI-Powered products, such as KlearCustoms and KlearHub, can digitize documentation, automate information sharing, and streamline workflows, thereby making the supply chain more resilient.
Using these software solutions boosts operational efficiency, lending customs brokers and importers a distinct competitive edge and enabling them to serve customers better.
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