The coronavirus pandemic is providing the impetus for a long-expected shift in global supply chains, according to a survey by cargo logistics and ports giant DP World.

After undertaking two surveys in 2020, the first between January and March and the second from October to November, the Trade In Transition report noted that companies are generally optimistic that overseas sales will expand despite the pandemic.

Four-fifths of them will invest in overhauling their transport links, the report found.

The second survey found 83% of executives stating that their companies are “in the process of reconfiguring [their] supply chains”.

The report defined supply chain reconfiguration as one or more of: switching or adding new suppliers, using different logistics providers, and changing production or purchasing locations.

DP World said in the report that it is neither a cheap nor an easy task to change supply systems.

The report found that firms in the survey, of which more than half have annual revenues in excess of $500m, are reallocating an average of 32% of their revenue from the first half of 2020 to reconfigure their supply chains.

Just over 20% of respondents are using more than half of their revenues to make the changes, which the report said “could indicate massive spend in the coming months and years on supply-chain shifts”.

It added that the pandemic is providing the likely impetus to invest in making these changes.

Supply chains are generally the products of years of investment, relationship building and training, it added, which means they cannot be changed overnight.

Recovery expectations

The survey also showed that more than 70% of respondents believe trade will recover from the effects of the pandemic in less time than the two years it took to bounce back from the 2008 financial crisis.

Asked how long it will take for global trade to return to the same level as the first half of 2019, before the pandemic hit, nearly 27% answered six to 12 months while 2% believed it will take less than that.

The most common response was one to two years, which 43% of respondents selected, and only 8% thought it could take more than five years for trade to recover.

Surprisingly, the respondents most pessimistic about recovery were companies from the health and pharmaceuticals and IT sectors, as they are industries that have generally done well during lockdowns.

Executives in the industrials, logistics, transport and travel, and general services sectors were more hopeful, the report said.

In late October, DP World reported a 3.1% year-on-year increase in gross container volumes on a reported basis at its terminals for the third quarter, when it handled 18.3m teu.