The global supply chain disruptions of 2024 left manufacturers and distributors scrambling to adapt. Extreme weather events and ongoing geopolitical conflicts impacted the availability and cost of materials and products worldwide. As the new year approaches, analyzing what sparked these disruptions and how they affected the trajectory of global supply chains going into 2025 can help mitigate future risks.
Global port congestion was one of the biggest culprits of supply chain disruptions in 2024. Attacks on ships in the Red Sea in response to the ongoing conflict in Gaza forced ships to avoid the Suez Canal and detour around Africa.
As a result, North America, Asia, and Europe saw increased congestion averages and higher container shipping demand. Increased shipping costs and longer trade routes disrupted international economies, ultimately contributing to inflation.
Although the Suez Canal incident was far from the first occurrence, it set a tone for worsening port congestion worldwide. The Panama Canal's historic drought magnified supply chain disruptions caused by the Red Sea Crisis. Although seasonal droughts are nothing new, water levels in Gatún Lake were lower than in any other January on record.
Due to historically low water levels, the Panama Canal Authority restricted the number and size of ships passing through the canal until August, when daily transit numbers were close to pre-drought levels. The strained supply chain issues lasted most of the year and cost Panama millions. Increasing climatological issues are a bad sign for global supply chains in the years to come.
A struggling shipping industry with port closures, congestion, and a lack of containers to meet shipping demands has had cascading effects dating back to the 2020 onset of COVID-19. According to Sobel Network Shipping CO., Inc., "Forecasts suggest ocean cargo prices could reach $20,000, potentially hitting the COVID-era peak of $30,000, and remain high into 2025. Spot ocean freight rates from the Far East to the U.S. increased by 36%-41% month-over-month, with general rate increases by ocean carriers rising approximately 140%."
China's claim over self-governed Taiwan resulted in restrictions on exports to Taiwan, sanctions on various companies, and waterway blockages. Further conflict can have devastating consequences on global supply chains. Due to upcoming policy changes, the 2024 U.S. election will further impact the conflict between China and Taiwan and the relationship between China and the U.S.
The Russian-Ukrainian war has significantly impacted global supply chains. From shortages and increased material costs to inflationary pressures and disruptions to the flow of goods, the ongoing conflict has caused various challenges throughout 2024. Suppliers, manufacturers, and companies saw increased logistics costs, lead times, and labor shortages that affected shipping businesses and cargo networks.
As of August 2024, U.S. inflation rates hit 2.5%, the lowest rate since February 2021. However, the reality for many countries — and even the United States only months earlier — tells a different story. With high interest rates tacked on, labor and raw materials for manufacturing cost more, creating the highest inflation in decades. Global inflation rates are stretching as suppliers, businesses, and consumers attempt to minimize the impact despite fuel surcharges and freight costs.
Demand forecasting isn't predicting consumer behavior as accurately as in the past. A polarizing upcoming presidential in the U.S. and more extreme monthly spending targets worldwide have consumers tightly holding onto their wallets. Policy uncertainty, geopolitical conflict, accelerated trend cycles, and a focus on sustainability have individuals more cautious about where they spend their money.
At Charming Trim, we help brands stay ahead of supply chain disruptions by offering diversified global sourcing networks. We have a presence around the world, with roots in the following countries:
Charming Trim has carefully established manufacturing and service sites in these countries to mitigate supply chain disruptions. Although there is no way to eliminate the risk, partnering with us for your apparel trim, eco-friendly packaging, and identification technology will help you best avoid disruptions.
Contact us today to learn why Charming Trim is a leading choice for all things trim.