Logistics is the necessary evil that permits global trade. As with all evils, businesses want to minimise Logistics costs (e.g. price, transit times and emissions) in order to maximise their gains from trade.
Another necessary evil is politics. While the world needs politics to function, we must not forget that whether its because the road to hell is paved with good intentions, or that power corrupts, in todays postmodern world, politics ALWAYS overrules economics. And most other forms of logic.
The near global Covid lockdowns are a case in point, limiting supply of Logistics capacity, driving an eCommerce driven demand boom, at a time when inventories were low after decades of just-in-time cost cutting and a decade of limited post-financial crisis investment in Logistics assets, people and technology.
Unnecessary wars are another, with subsequent sanctions cutting off key commodities exporters from major markets, disrupting supply chains and driving inflation.
The consequences of these political decisions, whether well intended or not, have reverberated around the world. For the first time in decades, stagflation is rearing its ugly head, and the number of people facing acute hunger is set to double to 265 million by end 2022.
To make matters worse, with the weaponisation of the global reserve currency against Russia, a schism is forming between the Western Bretton Woods financial system and an emerging Eurasian Commodity Standard system. Is the sun setting on Petrodollar dominance? How will that impact global trade and human and economic development?
