World events affect logistics: China-US standoff and more

The events of the beginning of the year set trends, especially in international logistics. The topic of relations between China and the United States has been tense for the last decade and we are witnessing a new turn. Many experts call it a trade war. It affects cargo delivery from China to Ukraine or other countries besides the US? What can we expect in the future? Let's consider the impact of the trade war on transportation, recovery, and artificial intelligence.

US-China trade war: consequences for the global market

We have already looked at China's impact on global logistics, logistics trends and risks. Find out more in our article Transportation routes: how to minimize risks.

China's logistics capabilities may be a concern or an opportunity for your business. But China is not the only one that has a major impact on global freight traffic. The United States is second in foreign trade. Although it imports more than it exports. 

Experts are assessing the relationship between the countries as a trade war, as both have introduced an additional tax on imported goods. It is important to understand that this affects not only businesses that work directly with these countries, but also more global logistics and business processes. 

How exactly does the trade war affect transportation:

1. Loaded traffic. Some businesses have started nearshoring and reshoring by sea route, which is loading the direction.

2. Risk of unstable supplies. Traffic congestion and unstable geopolitical situation increase risks at different stages of the route.

3. Rising tariffs. On some routes connected to China, tariffs have already doubled and will continue to rise due to new customs duties, fuel costs, and changes in other transportation resources. 

4. Problems on the routes. Many disputes around the Panama Canal and the influence of China and the USA. Tensions around the logistical artery have an economic impact, but so does the passage of this section itself.

5. Complications in the transportation of goods. China often revises the conditions for the import and export of various categories of goods, especially vulnerable transportation of dangerous goods. 

These are just some of the challenges that can be expected in international logistics, directly or indirectly related to China. But new solutions and opportunities are emerging.

The future of logistics: how to get out of the situation

It is becoming more difficult for businesses to have production only in China, so they are looking for alternatives. Therefore, it would not be wrong to say that the trend towards nearshoring and reshoring is becoming more popular for various kinds of businesses. Also, at the same time, strategies for sustainability of logistics routes are being developed to diversify business risks, carriers and shipping alliances. 

How new trends can help: 

1. Nearshoring is the search for locations to create new manufacturing hubs. Production, or part of it, is moved to a country closer to the business headquarters or to a country that meets the business’s needs. Often with the involvement of a local partner. For example, some businesses are moving capacity to other parts of Asia.

2. Reshoring is the return of production to the domestic region. More often, it is the complete return of production to a monolocal approach. 

These processes take a lot of time, resources and logistical traffic, especially maritime. The new location of production provides good long-term prospects, as in the future other countries and routes will be used to ship goods. 

The process of transporting production is part of new strategies to minimize risks to logistics. China is developing alternative transport corridors under the multimodal transportation using rail and sea transport. But global plans to expand transport corridors are not limited to China, India also includes plans to develop the road network. 

Currently, the following are being invested in the development of transportation:

1. Automation with AI

2. A smart approach to selecting multiple suppliers and staying in constant contact

3. Business continuity planning

4. Groupage cargo

Don't think that this only works for large companies. Ukrainian businesses can successfully use it for their transportation.

A revolution in transportation: artificial intelligence optimizes work

When we talk about artificial intelligence in international maritime logistics, we are not only talking about its use in organizational activities.

There are very high hopes for artificial intelligence in this field, in the future it can be used for autonomous ships for long-distance navigation. Although a prototype of an autonomous ship has been tested for a short distance for several years, it is not ready for large-scale operation. Progress is provided by companies in this area and state programs, such as in China, sponsoring the development and implementation of artificial intelligence at the state level.

The real work of artificial intelligence in logistics: 

1. Real-time adjustment of the vessel's route based on weather, congestion, traffic, fuel consumption and other data.

2. Analyzes and predicts the technical condition of equipment based on data from sensors on the vessel.

3. Potential reduction of carbon emissions by 47 million tons through better route adjustments. 

The main problem for countries when they start implementing technologies on a large scale is legal regulation. Leading countries such as China and the United States may not have time to adapt regulations and meet the capabilities of the latest technologies.