New US tariffs are prompting companies to reduce their reliance on China as a source of imports, but the impact on supply chains is far more profound. From the increase in dark shipping to escalating sanctions against countries like Iran and Venezuela, supply chain restructuring is becoming a priority. Captain Steve Bomgardner, Vice President of Shipping and Offshore at Polar Star Global, discussed the new risks and emphasized the importance of intelligence-driven response.
Global Conflict
The World Economic Forum has listed war as “the greatest risk facing the global economy this year,” placing new demands on companies to consider the impact of war on supply chain disruptions.
In recent years, companies have been working to expand their supply base, and China’s share of US goods imports has declined significantly, from 22% in 2017 to 17% last year. The UK has also reduced its reliance on China, with imports from the country falling 18% from mid-2023 to mid-2024. However, supply chains have become increasingly complex. While direct sourcing may have decreased, imports from other foreign suppliers, including Vietnam and Mexico, have increased reliance on China.
How many companies are at risk from backdoor imports from China? Furthermore, just as sanctions against Russia and Iran led to a significant escalation in shadow shipping (STS) and dark shipping activity, posing significant additional risks to legitimate vessels, increased tariffs are expected to prompt significant shifts in global trade routes and volumes. This will impact the size and activity of black market fleets as companies in proscribed countries seek new routes to market, particularly for high-value goods.
Real-Time Assessment
From insurers to shipowners and importers, there is an urgent need to understand the impact of this global geopolitical landscape on supply chains and establish robust, ideally multi-layered, risk mitigation models. From ensuring compliance with rapidly evolving sanctions to real-time route visibility and the ability to switch to second or even third-choice shipping routes in the event of disruptions, supply chain resilience has become even more critical and demanding.
Dealing with vessels associated with the “dark fleet,” even unintentionally, carries significant compliance and reputational risks. Many of these vessels are ultimately sanctioned, exposing companies to regulatory scrutiny and financial losses. However, with the increasing number of vessels targeted by the Office of Foreign Assets Control (OFAC) for using deceptive tactics such as name changes to evade detection and continue illicit activities, companies have a responsibility to act swiftly to identify the potential risks posed by these vessels and engage in unintentional trade with these entities.
Proactive Management
Real-time technology supports effective compliance by providing continuous vessel tracking and monitoring, and instant alerts when screening newly approved vessels. Furthermore, companies can leverage specialized intelligence solutions to identify high-risk dark fleets before they are added to sanctions lists, providing proactive risk identification and enabling early risk mitigation through vessel replacement.
Real-time insights, combined with efficient modeling, are also key to managing potential delays caused by issues arising from industrial action. 24/7 routing support, combined with AI and expert insights, enables vessels to minimize risks to cargo and lives. A deep understanding of route selection and shipping patterns is key to effectively addressing challenges such as the US East Coast port strike.
Such insights can also play a vital role in determining the viability of new second- and third-tier contingency suppliers. In addition to understanding suppliers’ ability to meet demand, the cost, safety, and reliability of shipping routes are now a crucial consideration.
Conclusion
Supply chain disruptions are inevitable. However, while 72% of companies have experienced adverse operational impacts due to supply chain issues, only 2% are prepared to address these challenges. With economic and political conflicts expected to dominate in 2025, businesses and countries are increasingly vulnerable.
Add to that the risks posed by compliance requirements, tariffs, and dark fleets, as well as the existing pressures and price ceilings facing container shipping, and reform is now essential. Supply chain restructuring should be a priority, and organizations should explore changes such as nearshoring and short-haul shipping to reduce risk and improve control. However, building resilience and emergency response capabilities is also crucial at every step, and this can only be achieved through the effective use of intelligence and knowledge systems that provide real-time insights across the entire supply chain.
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