I started covering supply chains as a journalist in 1999. When I told people what I did back then, their response invariably was, “What are supply chains?” Few outside the industry were familiar with the term. I used to tell them that supply chains were what enabled the stuff they used every day to get to them.
Fast forward 20 years and most people on the planet now understand the term. Pandemic-era shortages catapulted supply chains into the headlines, and people began to appreciate just how much their lives depended on the talented professionals in our industry who keep goods moving around the world.
That heightened awareness of the supply chain’s value has not been lost on world leaders (and aspiring leaders), who now see supply chains as a weapon to achieve their political goals.
For more than two years, Houthi rebels in coastal Yemen have attacked cargo ships in the Red Sea to express opposition to the war in Gaza. Backed by Iran, the Houthis are forcing ships to navigate around Southern Africa instead of sailing the much shorter route through the Suez Canal. They have effectively leveraged supply chains to elicit a political response.
Meanwhile, here at home, the U.S. government has pursued an erratic tariff policy designed to reshape sourcing and world manufacturing.
And of course the main supply concern this year has been Iran’s closure of the Strait of Hormuz, which has constricted the supply of the world’s oil, natural gas, and fertilizers. The Iranian government knows it lacks the military power to compete with the United States and Israel, so it turned to supply chains as a weapon. The strait’s closure forced up prices, especially for oil, and has fueled inflation worldwide. This supply chain weapon has been extremely effective.
However, Iran’s leverage may be nothing compared to what might happen if China invades Taiwan. This likely would result in the closure of another critical waterway—the Strait of Taiwan. Nearly half of the world’s cargo ships regularly traverse the Taiwan Strait, including about 80% of the largest ships. By closing off the strait, China would essentially be wielding the biggest supply chain weapon of all.
It is important that supply chain managers recognize this enormous risk and work now to diversify their supply chains. The U.S. should also work politically to shore up the supply chains of friendly nations, especially Mexico and Canada as we renegotiate the USMCA agreement. It is not too late to use the political clout our own nation holds to assure world supply chains are secure. It’s better to be proactive now than be forced to react later.
