At this time last year, economists and business leaders were cautiously optimistic about 2024, hoping the economy could stage a ‘soft landing’ — cooling off from a period of surging inflation and rising interest rates without tipping into a recession. While many remain cautiously optimistic, there’s a growing sense of relief that the economy sidestepped the worst-case scenario. As noted in a recent CNBC piece, “a gravity-defying jobs market …. a slowing pace of price increases and declining interest rates puts the macro picture in a pretty good place right now.”
Yet 2024 hasn’t been without its challenges for the global supply chain, which is still undergoing a long-term transformation amidst growing geopolitical, physical, and cyber disruptions. This year, the focus has been on belt-tightening, profitability, and cash management. Looking ahead to 2025, the industry will need to strike a balance between the often-competing priorities of efficiency, security, and innovation.
The bill comes due on cybersecurity. In early April of this year, a coordinated cyberattack targeted several maritime ports and vessels, causing widespread disruption.
The attackers reportedly used advanced ransomware and malicious software to disrupt port operations and tamper with the Automatic Identification Systems (AIS) on several ships, causing significant delays, misrouted cargo, and heightened risks of collisions and groundings. The total economic damage is estimated to reach as much as $500 million, as major shipping companies such as Maersk and CMA CGM were forced to reroute vessels and temporarily halt certain operations.
Incidents are growing in frequency and severity, substantially increasing risks of identity theft, espionage and severe safety incidents. The unfortunate truth in all of this is that the supply chain industry has historically underinvested in cyber security. The bill is now coming due.
Going forward, the industry will have to treat cyber security as a top priority, evaluating existing systems and processes and putting security at the forefront for any new deployments. And it must do so without unduly slowing down digital transformation efforts.
Tariff Turmoil. As I write this, the US election is a few days away. The candidates’ widely differing views on tariffs are sparking intense debate and speculation in regard to the potential impact on the supply chain industry, with one trade journal declaring: “New Proposed Trump Tariffs Could ‘Fundamentally Alter’ U.S. Supply Chains.”
My view is that regardless of which way the political winds blow, supply chain professionals should focus on what they can control, continuing the work that started in earnest post-pandemic of diversifying their supplier networks and implementing more nearshoring capabilities.
More disruptions (not least of all from new market entrants). Supply chain disruptions will remain a fact of life. What we will see more of in 2025 is disruption brought on by a surge of new startups.
Dave Clark, former CEO of Amazon’s worldwide consumer division, grabbed headlines earlier this year when he launched his new company, Auger, with lofty-but-bold promises of “a future where global supply chains operate with the simplicity of today’s most intuitive consumer technologies.”
Traditional supply chain companies would be wise to not underestimate the potential threat of a coming surge in new market entrants. VC funding is flowing back into startups, and investments in supply chain companies and tech represent an estimated 15%-20% of that funding.
The potential for these new entrants to upend the market order is unlike any we’ve experienced before. Why? AI. Because of AI, the pace of technology development is multiplying exponentially. These new companies, unburdened by legacy technologies, have a very real opportunity to leapfrog incumbents.
AI, automation AND upskilling. After a three-day walkout earlier this year, the International Longshoremen’s Association (ILA) and U.S. Maritime Alliance reached a tentative agreement on wages and extended their existing labor contract until Jan. 15. But the potential use of automation remains a major sticking point for the unions.
My personal view is that neither unions — nor anyone else — can stop the inexorable march of automation (despite a long, storied history of attempts to do so). In my experience, automation can and has displaced some jobs, but it has also changed existing jobs for the better and created entirely new ones.
My company recently worked with a client who embarked on a technology deployment with an expectation of eventually reducing headcount. In the end, when they saw how they could use an influx of high-quality, actionable supply chain data to improve operations AND their customer experiences, they added new positions.
AI and automation aren’t the enemy. But for supply chain companies to fully benefit from these technologies, they need to invest more in upskilling their employees. For example, with GenAI it’s crucial to train workers in prompt engineering so they can access the right information quickly and streamline outdated processes, all while creating new value for customers. Likewise, automation offers a chance to shift dangerous tasks away from human workers, freeing them up to take on higher-value responsibilities
AI and automation will increase. New entrants will upend existing markets. The companies that survive and thrive in this future will be cleared-eyed about the pace of change and will balance innovation, security and the interplay between technology and our human workers.
Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.
