IPE Real Assets: OnshoringIPERealAssets:Onshoring

A reconfiguration of the global supply chains is now under way in what is seen as the beginning of a multiyear process that will play out over the next decade. Geopolitics, a pandemic and wars are driving the reorientation of how and where goods are being manufactured and sourced. But the process and cost of relocating manufacturing are prohibitive, slowing the pace of relocation from one country to another.

The deglobalisation of trade is now a topic discussed by some multilateral agencies, concerned by what they see as an emerging trend. The World Bank blames deglobalisation on “misguided populism” in many countries and says it is doing serious damage to global trade.

Many countries have lost their appetite for new trade agreements, the Washington-based bank says in a paper published in February this year. “In the 2020s, so far, an average of just five agreements have been signed each year – less than half of the rate of the 2000s. The appetite for trade restrictions, meanwhile, seems insatiable. In 2023, nearly 3,000 trade restrictions were imposed across the world – roughly five times the number in 2015.”

The underlying shift in global trade patterns is not yet apparent or material to many executives. Rather, companies are more preoccupied with the immediate future.

*Reference: IPE Real Assets November/December 2024 Magazine