NewsTop StoriesViewpoint

The second Cold War is here — and supply chains will be the front lines

Entire supply chains will be rewritten, creating massive volatility and unpredictability

We are witnessing the remaking of the world order in front of our eyes — and this will impact global supply chains in unforeseen ways. 

We are about to experience the most dramatic and unpredictable supply chain map we’ve experienced since World War II.

If the Russia-Ukraine conflict’s international ramifications keep spreading, we face a real possibility of a bifurcating global economy, in which geopolitical alliances, energy and food flows, currency systems, and trade lanes could split.

During the first Cold War, the world was anything but flat. There were two worlds — the East and the West. That world is being recreated as we speak, and with it, Western companies will start to shift sourcing away from the East and more toward Western and neutral states. North American economic integration will become a new priority. Surface transportation across the Eurasian continent will become more complex, and possibly contested.

Entire supply chains will be rewritten, with new sources and partners — all in the interest of corporate and national security. This will create massive volatility and unpredictability.

Companies will prioritize vendors that can provide consistent and dependable supplies, likely paying a premium. In the end, those costs will be passed on to consumers in the form of higher prices.

While prices will become an important consideration for consumers, brands that offer a consistently and predictably available set of choices will enjoy pricing power. 

The future market winners will be the corporations that make the investments in supply chain infrastructure and reliable, Western-friendly production locations. 

Supply chain analyst roles will become the hottest jobs of the next decade, prized by corporations, consulting and even Wall Street for the ability to interpret, analyze and predict disruptions and risks in a new world order. Those same analysts will find themselves recruited heavily by national security, intelligence and defense organizations — as future conflicts will largely rise out of a desire to control materials and production. 

New investments in supply chain technologies and automation will be accelerated, as will preference for near-shoring and domestic sourcing.

Historical data models, based on following freight market trends, will become less relevant in the future. Companies with dynamic supply chains will require fresh data and forecasting that is constantly updated as new information and datasets become available.

The Ukraine crisis is perhaps the end of the preamble to a long history of geopolitical, economic and military conflict between the East and West in the second Cold War. Now the plot is thickening. State actors like Russia and China are choosing regional hegemony over global integration — we will see this play out further in the Baltics and the South China Sea, not to mention the Middle East and the greater Pacific.

World Trade Organization-led globalization took decades but accelerated when China entered in 2000. Global decoupling — if it comes to that —and tighter regional socioeconomic integration will also take decades, and the pace of change will vary, sometimes fast and sometimes imperceptibly.

At FreightWaves, we will cover every angle of this transformation for years to come, starting with our real-time data on global freight flows as well as the work of our expert journalists.


Click here for FreightWaves’ coverage of Russia’s invasion of Ukraine and its impact on the global supply chain.


Watch: Supply chain issues created by Russia-Ukraine war

5 Comments

  1. Changing global power map: Coastlines offer strategic (maritime) benefits, providing access to inland routes and, give nations defense/offense options like waterway blockades to access or, prevent moving supplies inland. (Latter particularly hurts nations w/ coastline but few raw materials and/or little/no industry). Control of the Adriatic Sea has considerable importance to the adjacent Mediterranean, currently controlled by the West. But with things taking shape with Russia/China/Iran/Ukraine…if control of the Black Sea (Russia boosting its presence) seeps into the Mediterranean, this changes supply chain raw materials access/movement considerably – and so goes the change in sea power influence between East and West.

    Both England and France have old relationships in the Levant. If an East-West conflict escalates further, then the Mediterranean becomes primary hot zone for maintaining or shifting control of some important, global supply chains. Meanwhile, Beijing RMB is climbing the currency ladder, though slowly yet increasingly causing commodity managers to take note of total landed costs.

    Mark Zetter

  2. I’m no student of history, but I don’t think it’s called a “Cold War” if there are missile strikes, invasions, and masses of people being killed. I think what we have here is a “Hot War.”

    1. You think this is hot?
      Both sides are sitting on nukes plus Chernobyl is in the region with no oversight on the area other than Russians.
      Not to mention if this maniac wants to start dropping incendiary bombs on urban areas.
      Not sure if Vlad is a psycho or socio path. I really believe he has checked out.

      1. Clearly, there’s room for the whole hot/hotter/hottest spectrum, but Putin has started dropping bombs on civilians already, so it’s no longer a “cold” war. And, hopefully, it won’t get any hotter than it already is.

Craig Fuller, CEO at FreightWaves

Craig Fuller is CEO and Founder of FreightWaves, the only freight-focused organization that delivers a complete and comprehensive view of the freight and logistics market. FreightWaves’ news, content, market data, insights, analytics, innovative engagement and risk management tools are unprecedented and unmatched in the industry. Prior to founding FreightWaves, Fuller was the founder and CEO of TransCard, a fleet payment processor that was sold to US Bank. He also is a trucking industry veteran, having founded and managed the Xpress Direct division of US Xpress Enterprises, the largest provider of on-demand trucking services in North America.