Prepare for these 7 emerging supply chain risks that pose a threat for supply chain managers trying to overcome recent challenges within the industry.
Supply management professionals have had a tough couple of years. Between trade wars, natural disasters, and geopolitical conflict, even the greenest supply chain managers have been fast-tracked and turned into hardened veterans.
Emerging Supply Chain Risks
But the challenges continue. Below, we share seven supply chain risks to consider in 2025.
1. Trade Wars
Perhaps the biggest issue caused by the Trump administration’s tariff war is business uncertainty. No matter whether decisions are being made as part of a grand strategy or on the fly, rapid-fire tariff announcements followed by backflips leave supply chain managers reeling and unable to plan ahead.
All eyes are on the U.S.-China relationship, especially since we raised tariffs on China to 145% and China retaliated with 125%. Bloomberg reports that cargo shipments have dropped as much as 60% in consequence. Walmart, Target and other retailers have warned of empty shelves and potential layoffs in Retail and supply chain jobs like trucking and logistics.
Agricultural exporters are feeling the heat, with China ceasing to buy U.S. products ranging from pork to lumber. Farmers are reporting massive financial losses and forced layoffs.
The Trump administration has stressed that the long-term gains will more than make up for the short-term chaos and rising prices for consumers. Several countries such as Vietnam have now come to the negotiating table, ultimately enabling the U.S. to soon strike better deals. But the focus must remain on our biggest trading partners – China, the E.U., ASEAN, Mexico, and Canada.
2. Rare Earths
China, which presently produces some 60% of the world’s rare earth elements and processes 85% of them, has restricted their sale to the U.S. Until alternative sources are developed, this will significantly impact several high-tech sectors:
- Consumer Electronics: Devices like smartphones, laptops, and tablets rely on rare earths for components such as speakers, microphones, and displays. Supply disruptions may lead to higher prices and limited availability of new models.
- Electric Vehicles (EVs): Rare earths are essential for manufacturing powerful magnets used in electric motors and batteries. A supply shortage could slow down EV production and increase costs, affecting the automotive industry's transition to electric mobility.
- Renewable Energy: Wind turbines and solar panels often require rare earth elements for efficient energy conversion and storage. Limitations in supply could hinder the growth of renewable energy projects and increase costs for clean energy solutions.
- Aerospace and Defense: Rare earths are critical for various defense technologies, including missile guidance systems and communication equipment. Reduced access could impact national security and defense readiness.
- Telecommunications: 5G technology relies on rare earths for infrastructure components. Supply chain disruptions could delay the rollout of 5G networks and associated technologies.
- Medical Devices: Certain high-precision medical equipment uses rare earth elements for imaging and diagnostic technologies. Limited supply may affect healthcare advancements and patient care.
3. War and Geopolitical Risk
The Ukraine war has already contributed to higher fuel prices, rising inflation, and unexpected price increases in products such as breakfast cereals. As global markets continue to grapple with these effects, the conflict has underscored the fragility of supply chains heavily reliant on stable geopolitical conditions. While there is hope that the war in Ukraine is entering its final phases, other geopolitical flashpoints could quickly exacerbate the situation.
For instance, the Strait of Hormuz, a critical chokepoint for oil shipments, remains a volatile region where tensions between Iran and other nations could disrupt oil flow. Any conflict or military escalation here could lead to a spike in fuel prices, further driving inflation and impacting a wide array of products that rely on oil for transportation and production.
Similarly, the South China Sea, a hotspot for territorial disputes and trade routes, poses risks not only to regional stability but also to global supply chains. Increased military presence or conflict in this area could threaten shipping routes, causing delays and shortages in goods ranging from electronics to consumer products.
As these geopolitical tensions persist, businesses may face increased costs and unpredictability. Companies already struggling with tariff impacts may find it difficult to absorb additional price hikes, leading to higher retail prices for consumers. Ultimately, the interconnectedness of global supply chains means that localized conflicts can have far-reaching consequences.
4. Climate Change
Ignoring a problem won’t make it go away. Climate change brings significant risks to the global supply chain, mainly due to steadily rising temperatures and more frequent and severe weather events like hurricanes, floods, and droughts.
These disasters can disrupt production and logistics, leading to shortages of raw materials and finished goods. Additionally, changing climate conditions can affect essential resources like water and agricultural inputs, complicating production. Rising sea levels and extreme weather also make shipping routes less reliable, increasing costs and delivery times. The Panama Canal authority, for example, has recently struggled with a water shortage in the lake that feeds the canal, leading to restrictions on ship size. We also need to consider AI’s – and their associated data centers’ – insatiable appetite for energy.
Looking beyond the Trump administration, future governments attempting to mitigate climate change may impose stricter environmental regulations, which can raise compliance costs for businesses. As consumers become more eco-conscious, there's a shift toward sustainable products, pushing companies to adapt their strategies. Resource scarcity and climate impacts can heighten geopolitical tensions, further affecting trade.
5. Port Congestion
Ports are sensitive operations that can be easily disrupted. A recent MIT report found that a disruption at a major U.S. port could trigger a domino effect, potentially leading to the collapse of the entire network. Without the ability to quickly reroute cargo, other ports may struggle to manage the sudden influx.
The Port of Los Angeles in the USA tops the list of the world’s most congested ports, grappling with high cargo volumes due to ongoing trade growth and workforce limitations, leading to persistent bottlenecks. This congestion results in delays during unloading, increased storage fees, and necessitates rerouting shipments, with current average wait times of 2.5 to 3 days. Close behind is the Port of Long Beach, also in the USA, which faces similar issues linked to its neighbor, resulting in rising costs from demurrage and detention. Average wait times here are approximately 3 days.
In China, the Port of Shanghai is experiencing congestion due to high export demand and operational delays, causing prolonged transit times and driving up shipping costs, with current average wait times of 0.8 days, a 77% increase from the previous month. The Port of Ningbo-Zhoushan is also struggling with increased freight volumes and capacity constraints, leading to delays in shipments to Europe and the Americas, and average wait times of 0.4 days, up by 70%. In Belgium, the Port of Antwerp is facing a surge in container volumes, resulting in higher storage costs and extended lead times for European imports and exports, with current wait times of 0.4 days, an increase of 117%.
6. Trucker Shortages
Trucks transport over 70% of all freight in the U.S., making the trucking industry crucial to the economy. However, despite projections that employment of truck drivers will grow by 5% from 2023 to 2033, this increase won't be sufficient to address a significant driver shortage. According to Statista, the U.S. trucking industry is expected to face a shortage of about 162,000 drivers by 2030.
The turnover rate in the industry is alarmingly high. Research from the Professional Driver Agency reveals that 40% of truckers are actively seeking new jobs, with an average turnover rate of 92.7% among carriers earning over $30 million annually.
The typical truck driver is a male in his 40s, and only 12% are under 25, while just 6% are women. These low job satisfaction rates and high turnover make trucking less appealing to potential new talent and underrepresented demographics. With many drivers approaching retirement age—144,000 are over 65—the industry faces a pressing challenge in finding new drivers to fill these gaps.
7. Cybersecurity
Cyber-attacks are a big concern in today’s supply chain management. The 2024 Crowdstrike outage, while not intentional, showed just how disruptive these cyber outages can be, costing Fortune 500 companies over $5 billion in direct losses. This incident really highlights why supply chain teams need to make cyber-attack risks a top priority for 2025.
What’s even more worrying is that only 13% of businesses look into the cybersecurity risks from their immediate suppliers, and just 7% check their whole supply chain, according to a UK report. We know that modern supply chains are notoriously complex, involving multiple vendors, manufacturers, and third-party organizations, many of which have access to centralized data. This complexity makes them prime targets for cybercriminals, and a single data breach or cyberattack could set off a chain reaction of disruptions.
Partner With a GPO to Combat Supply Chain Risks
Partnering with a group purchasing organization is a proven strategy to help combat the supply chain risks businesses are facing. GPOs help reduce supply chain risk by diversifying your supplier base, improving supplier relationships, and decreasing the amount of time it takes to source goods and services thanks to pre-negotiated contracts that are readily available.
As a GPO, Una offers these services to our members free of charge, meaning you can easily access more options when it comes to procuring the items you need to ensure business continuity, and reducing the overall impact these challenges pose to your business.
Experiencing supply chain woes? There’s safety in numbers. Get in touch with Una to discuss the power of group purchasing and the benefits of joining a group purchasing organization to help navigate supply chain uncertainty.
