Surfin' USA

If you are a logistician, it’s time to learn to surf.

For my entire career I’ve been involved in global trade.  One year out of college, over thirty years ago, I found myself working in Mexico. One thing led to another and the last time I checked I’ve done business in a couple of dozen countries.

For me, global trade and free markets long ago slipped into the category of “fact.”  That “fact” inevitably led to an expectation that over time trade would continue to become more integrated. According to the World Bank, in 1960 exports were 5% of the US GDP.  In every year since then, exports as a share of the US GDP has grown. In 2014, exports hit almost 13.5%.  The mirror image is similar.  For the US, the World Bank reports that over the same period US imports have grown from 4.2% of GDP to 16.5% of GDP.

Then the earth moved. Well, it hasn’t moved yet, but before an earthquake there are always tremors.

Brexit looms. Trump is promising tariffs, trade barriers, and a wall. Clinton turned against the transpacific partnership, after being for it.  Muslim extremists — slaughter in the streets of Paris, across Iraq, in the airport in Istanbul — will force the hand of politicians. In the latest installment of the soap opera that is playing out in the South China Sea, the president of Malaysia held a cabinet meeting on a warship in the Natuna archipelago, a piece of political theater that surely resonated in Beijing. 

One blip is an aberration, two are a concern, and three make a trend. Trends have been disrupted. We all operate and trade internationally. It is inevitable that global movement and global trade will face increased friction. If you are a logistics leader, it’s time to create contingency plans.

More potentially disruptive events are looming on the horizon. If the zika virus turns into a pandemic, will political leaders restrict international movement? What are Putin and a resurgent Russian bear going to threaten next? Will the “New Silk Road” across central and southern Asia turn international trade on its head? (See “The most important infrastructure initiative you’ve never heard of … ,” December 2015.)

We’re logisticians, and our companies rely on us to keep things moving. Where do you buy? Where do you sell? We know how to react if trade barriers come down, because we’ve been doing it for decades, but what are we going to do if trade barriers go up? What are your contingency plans? 

Have you even thought about it? If you don’t know how to surf, get a life raft.