In the vast tapestry of the global wholesale industry, the threads of domestic supply chains weave intricate patterns. And their importance cannot be overstated.
While we’ve touched upon global supply chains in a previous post, today, we shift our focus closer to home.
With our gaze focused on the global supply chains, it’s easy to forget that local supply problems and logistical challenges can send a ripple through the fabric of the international wholesale market.
The Interplay Between Domestic Supply Chain Disruptions and the International Wholesale Market
In our increasingly globalized world, it’s easy to be lured into thinking of economies as single, cohesive units. But beneath this veneer of unity, local nuances play a crucial role.
Disturbances within one country’s domestic supply chain and production capacity can cause aftershocks in markets thousands of miles away in other countries. And these disruptions aren’t limited to major catastrophes either.
What Causes of Domestic Supply Chain Disruptions?
Natural Disasters: Events such as tsunamis in Southeast Asia, wildfires in Australia, or earthquakes in the Americas can disrupt supply chains.
They not only damage infrastructure but also render large areas inaccessible, affecting timely deliveries and causing financial losses.
Strikes or Labor Disputes: Labor unrest in key industrial zones can halt production, and it’s a factor that every country has to deal with.
For example, port worker strikes can paralyze shipments, causing delays for wholesale importers and exporters alike.
Infrastructure Failures: A cyberattack on a major port’s IT system or a power outage in a crucial distribution hub can cause bottlenecks, disrupting schedules for weeks or even months.
What are the Implications of Local Disruptions for International Wholesale Suppliers and Importers?
For wholesale suppliers USA-based and abroad, these domestic disruptions can prove costly. From contracts being renegotiated to prices being recalibrated, and, in some cases, partnerships reconsidered. This impact isn’t a trifling risk that can be ignored.
The Rising Concern: How Do Trade Tensions and New Restrictions Affect Wholesale Import/Export?
Trade, often described as the lifeblood of the global economy, has been under stress. In recent years, tensions and restrictions have placed it under siege.
A Brief History of Trade Tensions and New Restrictions
Russian and Ukraine grain export restrictions: The Eurasian breadbasket has been pivotal in global grain supply. When countries like Russia and Ukraine impose export restrictions, it not only limits global supply but also creates price surges.
For instance, a temporary cap on wheat exports from Russia in the past led to surging global prices and panic among locals dependent on these imports.
APEC export restrictions on food products: Within the APEC community, key players like China, Japan, and the Philippines have, at various times, grappled with trade tensions. When these governments place bans or quotas on staples like rice or soybeans, the aftershocks are felt across the globe, from Africa to the Americas.
Trade restrictions and the food crisis: The specter of the 2008-2012 food crisis looms large, with its painful memories of skyrocketing prices and widespread social unrest. By mid-2022, 34 countries had already imposed restrictions, eerily close to the 36 during the earlier crisis.
International grain export restrictions during COVID-19: The pandemic tested global supply chains like never before. Countries, fearing food security issues, began restricting grain exports, leading to concerns about a possible food crisis and driving up global grain prices.
The Impact on Bulk Ingredient Distribution
Wholesale importers and exporters had to rethink strategies. Long-standing contracts were renegotiated, prices adjusted, and alternative suppliers sought. Some food brands faced the brunt, unable to source essential raw ingredients, leading to production halts.
The Ripple Effects on Other Sectors and Markets
Beyond the immediate challenges of sourcing, food brands faced an evolving marketplace. With the price of raw ingredients fluctuating, many had to adjust their product pricing, leading to a domino effect across the food industry.
Why Do Governments Restrict International Trade?
Understanding the intricacies of global trade means grasping the motivations behind governmental restrictions. Sometimes these policies are a knee-jerk reaction to a crisis, while at other times, they’re a result of well-thought-out strategies. Let’s dive deeper.
Food and Fertilizer Export Restrictions
The Food and Fertilizer Export Restrictions Tracker acts as a sentinel, monitoring the restrictive policies that nations impose.
Lately, we’ve seen an uptick in embargoes on vegetables, with key produce like onions, tomatoes, potatoes, and carrots being the focus. These restrictions, often instituted to maintain domestic supply or stabilize local prices, can inadvertently create turmoil in the international market.
A concerning trend, food nationalism, is on the rise. As per the International Food Policy Research Institute (IFPRI), a whopping 17% of the global food market trade calories faced some form of export bans, heightened tariffs, or other barriers in recent times.
This move, often driven by self-interest and the notion of “our country first,” ends up restricting global trade and can lead to supply shortages and inflated prices.
Import and Export Restrictions on Goods and Services
Beyond food, there’s been an upsurge in restrictions involving the transfer of technology and services, especially concerning entities perceived as “foreign adversaries.” Such decisions, while potentially safeguarding national interests, can strain international relationships and have ripple effects on the broader economy.
Export Restrictions on Vegetables
Vegetables, essential for our daily sustenance and nutrition, haven’t been spared from the waves of restrictions.
Referring back to the Food Export Restrictions Tracker, countries are increasingly placing export embargoes on vegetables. Such decisions, meant to ensure domestic supply, can lead to potential scarcities in the global market, hitting countries that heavily rely on imports.
How Do Temporary Export Restrictions Affect Your Food Brand?
Temporary export restrictions, often reactionary measures governments impose to handle crises or perceived threats, can deeply affect the supply chains food brands rely on.
The Immediate and Short-Term Impact on Food Brands
Upon imposition of these restrictions, food brands face an immediate scramble. They’re forced to re-evaluate their procurement strategies, seek alternative suppliers, and sometimes even halt production.
Yet, it’s not all just bleak.
In the face of adversity, some brands have found opportunities to innovate, tapping into new markets or even developing alternative products.
The Long-Term Implications of Local Restrictions on International Relationships
Short-term disruptions might seem like brief blips, but their shadows can be long-lasting. Because trust, once broken, takes time to rebuild.
Brands may hesitate to engage with suppliers from countries that frequently impose export bans, fearing future disruptions. Over time, this wariness can lead to strained international trade relationships, challenging the very fabric of global business partnerships.
Selecting the Right Bulk Wholesale Supplier to Mitigate the Risk of Wholesale Distribution
Navigating the stormy seas of wholesale distribution, especially in turbulent times, calls for a solid anchor. Choosing the right wholesale supplier—one that’s resilient, adaptable, and forward-thinking—can make all the difference.
What to Look for in a Wholesale Supplier Amidst Disruptions?
Diversified Supply Sources: Suppliers with a diversified sourcing strategy can better maneuver around disruptions, ensuring consistent deliveries.
Proactive, Transparent Communication: In times of crisis, communication is key. Suppliers that provide timely updates and have open channels of communication help brands strategize and plan more effectively.
Contingency Planning: The best-laid plans can go awry. Suppliers that have robust contingency plans, ready to be deployed at a moment’s notice, can be invaluable allies in navigating disruptions.
The challenges of the global value chain are many, but with knowledge, preparation, and the right partners, brands can not only weather the storm but also find opportunities to grow and innovate.
By being that right partner for our clients, we’re able to mitigate the impact of local disruptions on the bulk coconut cream and other ingredient market. Browse our Ingredient Brothers Wholesale Catalog to see which markets we can help you explore.
Feel free to get in touch with our team here, and together, let’s explore and address your future needs!