• The development of parallel supply chains to de-risk the global flow of intermediate goods/services is a key macroeconomic trend
• COVID-19 has accelerated the trend: the healthcare, technology, consumer staples, textiles and electronic sectors likely at forefront
• Changes will include alternative host markets, mainly in Southeast Asia, and re-shoring of production processes, mainly in the US, euro area and advanced Asia markets
• Over a five-year transition period, the changes will be net positive for the global economy and are anticipated to generate around USD 63 billion in additional global insurance premiums
Global supply chains are undergoing fundamental and accelerated restructuring, the latest Swiss Re Institute sigma study, “De-risking global supply chains: rebalancing to strengthen resilience“, says. The disruption to the flow of intermediate goods and services during the COVID-19 lockdowns has made governments and manufacturers ever more aware of the risks inherent in today’s increasingly complex, specialised and global production processes. Manufacturers, meanwhile, are speeding up their development of parallel supply chain operations in new host markets alongside existing production bases as a means to diversify and strengthen their operational resilience. Markets in Southeast Asia will be the preferred destinations as new host locations. There will also be some re-shoring of activities back to the US, the euro area and advanced markets in Asia.
“Global supply chain restructuring has become a key macroeconomic trend and the COVID-19 experience has accelerated changes, “ Jerome Jean Haegeli, Swiss Re Group Chief Economist, said. “During the pandemic, lockdowns brought international exchange to a near halt, making businesses, and governments increasingly aware of the impacts that disruptions in today’s very complex and specialised global supply chains can have.“
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