21 March 2024 (lloyd's List) - DEVELOPED economies may be settling into the new geopolitical realities and disruptions affecting supply chains, but this is not always the case for less-developed countries.
Small island developing states are the most affected by disrupted supply chains, according to the UN Committee on Trade and Development, which will hold a forum in May to address the issues facing less-developed nations.
Hosted by Barbados, the Global Supply Chain Forum will focus on the vital role of global supply chains in promoting economic growth, job creation, and poverty reduction.
“We are organising this forum to deal with an issue that affects us all: how to form a resilient and sustainable supply chains,” said Unctad deputy secretary-general Pedro Manuel Moreno.
“Global supply chains have been experiencing major disruptions, and new challenges keep arising. The pandemic was an unprecedented shock to supply chains, triggering a steady decline in trade and shortages of essential goods.”
Since then, recent geopolitical tensions have disrupted major trade routes, such as those in the Black Sea and Red Sea, while climate change was also having an impact in the form of lower water levels in the Panama Canal.
“Small island developing states, including Barbados, are particularly affected by these challenges,” Moreno said. “They depend heavily on maritime transport but have fewer resources to mitigate and adapt.”
Unctad’s 15th quadrennial conference in 2021 adopted the Bridgetown Covenant to promote inclusive and resilient economic recovery in developing countries as they grappled with unequal access to Covid-19 vaccines, a debt crisis, the climate emergency and other unprecedented challenges.
But Barbados’ permanent representative to the UN, Matthew Wilson, said the facts were clear.
“Small countries do not control the supply chains and we are the most vulnerable to many of the issues that disrupt supply chains; unpredictable climate, lack of production capacity, high indebtedness, small, remote markets and lack of modern infrastructure.”
Smaller economies also lacked influence over the main actors in supply chains, whether businesses or larger governments.
“The reality is that we are often price takers, product takers and policy takers,” Wilson said.
“This places us in incredibly vulnerable situations. We saw this during the pandemic when we were often at the back of the line when it came to vaccines and protective equipment, and we see it when there are disruptions to trade routes, as we’ve seen with the Red Sea and the Panama Canal.”
He warned that the longer the Red Sea crisis continued, the worse it would become for smaller nations.
“Prices for imported goods go up and fuel prices go up,” he said. “Supply chains barely extend to us now; shorter chains may cut us off completely.”
Barbados director general of foreign affairs and foreign trade Donna Forde warned that small island developing states were dependent on international trade for development, given their limited resources, and were heavily reliant on supply chains to ensure access to goods and services.
“We depend on supply chains for every facet of our daily lives,” Forde said.
“Supply chains have still not fully recovered from the pandemic and are further exacerbated by the conflict in the Black Sea and the Red Sea.”
Disruptions to maritime trade would undermine the economic recovery achieved in the post-pandemic period, she added.
“These disruptions lead to delayed deliveries, higher costs and can affect access to energy products, as well as the food security of developing countries.”
