New normal: CEOs worry about unpredictable supply chains

• The pandemic and subsequent recovery caused significant disruptions in global supply chains due to restrictions and border closures.
• Despite a recent surge in the industry, ongoing disputes, environmental concerns, and a complicated geopolitical climate are driving up shipping costs and prompting a reevaluation of certain operational methods.
• Since late November, commercial vessels traveling in the Red Sea have been targeted by Houthi rebels from Yemen.

CEOs in DAVOS, Switzerland are closely monitoring the tensions in the Red Sea, warning that this kind of volatility for supply chains is likely to persist.

Since November, Yemeni Houthi rebels have been attacking commercial vessels in the Red Sea. The militant group, linked to Iran and supportive of the Palestinian cause, justifies the attacks as a response to the ongoing conflict in Gaza.

The U.S. and U.K. have initiated a series of strikes to stop attacks and safeguard commercial vessels. Nevertheless, the escalating tensions have led several cargo ships to halt their journey through the region and opt for the longer and more expensive route via the Cape of Good Hope in Africa. This diversion adds approximately 10 days to the transit time, significantly increasing the cost of moving goods from Asia to Europe and vice versa.

Ingka Group CEO Jesper Brodin expressed regret over the current global disturbance at the World Economic Forum in Davos, Switzerland, stating that the company has become accustomed to living in turbulent times.

He stated that the volatility was the new normal, as he believed that the world had become more dynamic and turbulent in recent years.

Currently, unlike during the Covid-19 pandemic, Ingka Group's IKEA stores have full stocks, putting them in a good shape, according to Brodin.

The pandemic and subsequent recovery caused significant disruptions in supply chains, and now, the ongoing conflicts, climate change, and geopolitical tensions are leading to higher freight rates and a reevaluation of supply chain processes.

DHL CEO Tobias Meyer expressed worries about the new normal for supply chains.

He stated that we experience continuous disruptions due to issues in the Panama Canal and the Red Sea, which have accumulated and raised concerns.

He predicted continued volatility, stating this on CNBC Wednesday from Davos.

He stated that the world will experience volatility from 2024 to 2025 due to the high level of disruption sources.

Central bankers have been dealing with high inflation since 2022 due to fluctuations in supply chains, which may result in higher prices for consumers and additional difficulties for them.

Thomas Jordan, the governor of the Swiss central bank, stated on Wednesday that the geopolitical situation is not favorable.

If there is an escalation in the Middle East or Eastern Europe, it could affect energy prices, the economy, exchange rates, and inflation. We must determine the best course of action.

He stated that our monetary policy involves a risk management approach, and we will consider these risks to determine the best course of action.