Businesses embrace supply chain diversification amid global uncertainty

Three-quarters of businesses worldwide are expanding their supplier networks to mitigate risks in an increasingly fragmented global environment, according to new research by Economist Impact and DP World.

The findings, revealed at the World Economic Forum, show a strategic shift as firms adapt to geopolitical uncertainty, heightened by “America first” policies in the United States. The fifth annual Trade in Transition study surveyed more than 3,500 supply chain executives globally, highlighting the need for resilience against rising protectionism and shifting alliances.

Non-aligned countries such as Vietnam, Mexico, India, the UAE and Brazil are emerging as key trade hubs, with 71 per cent of executives identifying these regions as crucial for risk mitigation. Meanwhile, 40 per cent of firms are increasing U.S.-based sourcing, and 32 per cent are adopting dual supply chains to hedge against geopolitical tensions.

Friendshoring—relocating supply chains to politically aligned countries—has gained traction, with 34 per cent of businesses pursuing this strategy. Economic challenges, including prolonged inflation and high interest rates, remain a priority for 33 per cent of respondents.

“Global trade today is more complex than ever, demanding agility, resilience and innovation,” said Sultan Ahmed bin Sulayem, DP World group chairman and CEO. He emphasized DP World’s commitment to equipping businesses with the tools to navigate fragmented markets.

John Ferguson, global lead for new globalization at Economist Impact, highlighted three key forces shaping global trade: shifting geopolitics, climate change and advances in AI and automation.

“Firms that stay agile and cost-efficient will have the edge,” Ferguson said. “Those combining risk management with AI experimentation and openness will be best placed to succeed in this new chapter of globalization.”