Supply issues push up inflation

During 2022 demand is expected to increase further putting even more pressure on production levels, leading to supply shortages and reduced import growth.

“The report is evidence that rising freight rates, and low production levels, coupled with a volatile social-economic situation in Europe, will keep inflation high in 2022 as companies navigate a risky trading environment,” said DP World Group chair and chief executive, Sultan Ahmed bin Sulayem.

“But supply chains are adapting, and executives are positive about the future of trade, which will prove durable in the near to medium-term despite any inflationary fears.”

The survey of 3,000 respondents, produced in partnership with Economist Impact captured perspectives of company leaders across the world. In addition to rising inflation, geopolitical tensions continue to concern executives with 30% stating the ongoing trade war between the US and China as their top reason to be pessimistic about global trade.

Despite the apprehension and low production levels, international revenue expanded for 68% of companies exporting freight in 2021, compared with 42% in 2020.

Companies are also changing their strategic outlook with almost half (48%) now diversifying their supplier base with efforts focused on sourcing raw materials (24%) and managing shipping lines and logistics (21%). The highest cited reason for optimism for global trade was the growth of technology such as 5G and digitalisation to ease supply chain issues.