By Wyeth Ruthven, Director of Congressional and Public Relations, Health Industry Distributors Association
For distributors of medical products, ongoing shipping challenges are a test of resilience. It is never just one thing creating uncertainty in shipping markets – it is a multiplicity of factors. Tariff policy and geopolitical instability are short-term disruptions with long-term impacts. Over time, shipping lanes are shifting to serve markets that are growing. It is up to shippers to adapt to these uncertain times.
Middle East conflict fosters uncertainty
Parts of the region have been in continuous conflict for the last three years, with a cumulative negative impact on shipping. Houthi rebels in Yemen have repeatedly attacked container ships entering the Red Sea, forcing carriers to reroute cargo around the southern tip of Africa.
United States military action against Iran has resulted in oil tankers pausing their transit through the Strait of Hormuz. In mid-March, Maersk CEO Vincent Clerc estimated that disruptions to global shipping have added a 15% to 20% increase to the cost of freight. Even if these conflicts were resolved tomorrow, it would be months before carriers felt secure enough to resume their regular patterns of commerce.
Demographic trends driving trade patterns
Growing populations and rising standards of living in the developing world are leading to the growth of north-south shipping alongside the traditional trans-Atlantic and trans-Pacific trade routes. Analysts predict that by 2040, trade between Asia and Africa will become just as large as the trans-Atlantic trade between Europe and North America.
Per capita incomes in the developing world are growing – more purchasing power drives more commerce and more trade. Even a modest rise in living standards in Africa will drive significant new demand for food and consumer goods. Africa has added 350 million people – a market equal to the size of the United States – in just the last five years.
HIDA’s work to keep you informed
The headline for shipping in the next 12 months is uncertainty. But a lack of certainty doesn’t have to mean a lack of preparedness. HIDA’s Shipping Work Group has been a forum for logistics experts in the medical supply chain to share best practices. In a market where disruptions linger long after the news cycle moves on, the organizations that plan for variability will be the ones that keep product flowing.