The Covid- pandemic exposed the vulnerability of global supply chains (GSCs). The subsequent geopolitical crises, including the Suez Canal blockage in 2021, the ongoing Israel-Gaza conflict, and the Russia-Ukraine conflict, have further destabilized the already fragile ecosystem of GSCs.
These current situations characterised as VUCA (Volatility, Uncertainty, Complexity, and Ambiguity), has profoundly affected GSCs, eroding its resilience and reliability.
Despite the debilitating impact of disruptions on India’s shipping industry, the path to building resilience in the face of VUCA lies in acknowledging India’s pivotal role and harnessing a collaborative global effort.
By recognizing the interconnectedness of global supply chains and the effects of VUCA, India can leverage its strategic position to foster a unified response, promoting a more robust and adaptable shipping ecosystem. Through collective action and international cooperation, India can transform these vulnerabilities into strengths, ensuring a more resilient and sustainable future for its shipping industry.
To build resilience against VUCA, strategic alliances within container shipping provide a blueprint. By improving schedule reliability from 60 per cent to 90 per cent, these alliances enable shippers to plan their export-import (EXIM) operations more effectively.
India can become a key player in stabilizing global supply chains by initiating modernization of ports, enhancing inland connectivity, and promoting the ‘Make in India’ campaign.
Additionally, India could actively support sustainable logistics practices by adopting green technologies in its shipping sector, helping to reduce fuel consumption and align with global sustainability goals.
VUCA resilience
For developing countries, VUCA resilience requires a balanced approach combining self-regulation and organized trade regulation. There is a critical need for the shipping industry to build trust among stakeholders, including freight forwarders, non vessel operating common carriers, and the broader trade network.
India, as a major exporter with a strong MSME base, can play a pivotal role by driving greater transparency in logistics costs, promoting stability in freight rates, and leading the push for collective crisis management within the global trade network.
Moreover, global forums like the International Maritime Organization (IMO) and the United Nations Conference on Trade and Development (UNCTAD) must prioritize discussions on regulatory frameworks to manage future disruptions. India can champion better global regulatory standards, protecting developing economies’ interests.
In September 2022, the government launched the National Logistics Policy to enhance the country’s resilience to VUCA challenges through targeted processes, actions, and technological interventions.
This improved India’s logistics ranking from 44 to 38 globally. The government also focuses on enhancing port performance and promoting transparency and efficiency in the logistics market by establishing a service improvement group to address issues impacting ease of doing business.
Tech initiatives
On the technology front, a Unified Logistics Interface Platform (ULIP) is being developed, with the marine version – Sagarsethu already operational. Infrastructure improvements are a priority, with the PM GatiShakti initiative leveraging geospatial technologies to plan multi-modal infrastructure projects.
The development of multi-modal logistics parks, seamless last-mile road/rail connectivity to ports, and guidelines for boosting domestic ship building and container manufacturing are key initiatives.
Additionally, the government recently approved the establishment of 12 industrial corridors, which will further boost manufacturing and exports.
In conclusion, GSC disruptions should be viewed as a challenge for global economy, requiring global cooperation based on geoeconomic considerations more than geopolitical ones, to withstand the high VUCA waves.
Therefore, amidst trend toward regionalization and strategic trade positioning in this new era of trade dynamics, a global solution through collaboration in times of conflict is essential. The Global South, in particular, must collectively develop strategies to mitigate these disruptions.
The writer is Joint Secretary, DPIIT, Union Ministry of Commerce & Industry. Views are personal