Reshuffling Value Chains – Davos 2023 Session Recap

Reshuffling Value Chains – Davos 2023 Session Recap

How can we build resilience into increasingly fragile global value chains without losing the benefits of globalisation?

This question formed the heart of a panel session discussion on Thursday 19th January at the World Economic Forum Annual Meeting in Davos. The panel included our Group Chairman and CEO, Sultan Ahmed bin Sulayem, as well as ministers from Saudi Arabia and India, and senior business leaders from Schneider Electric and Oerlikon.

The COVID-19 pandemic and other world events, such as the high volume of global trade that was brought to a virtual standstill by a container ship blocking the Suez Canal, have exposed the vulnerability of modern supply chains.

Responding to the pandemic, “we started to launch and invest in many digital platforms to help us overcome and to be able to reach our customers,” Sultan Ahmed bin Sulayem, told the Davos audience.

DP World Group Chairman and CEO, Sultan Ahmed bin Sulayem, speaking at the Reshuffling Value Chains session at the World Economic Forum Annual Meeting 2023.
CREDIT: World Economic Forum

However, global fragmentation is increasing the threat of protectionist trade measures and prompting renewed talk of turning to restrictive practices like nearshoring, which involves sourcing and producing goods close to home. Such moves could have profound repercussions for global trade, by limiting the supply to global markets of physical goods, skilled labour, innovation and other resources.

“This is moving from a hub-and-spoke global value chain system to a multi-hub global value chain, where each region will be able to play to its strengths, where each country will be able to play to its strengths, still working in an interconnected interdependent way,” said Khalid Al-Falih, Minister of Investment of Saudi Arabia, as he reflected on the changes taking shape in contemporary trade.

There are a number of things stakeholders can do to make value chains more resilient and help boost trade, reduce protectionism and increase value-chain efficiency.

“When we see a problem as a company in logistics and ports, we try to find solutions,” said Sultan Ahmed bin Sulayem.

“The supply chain is very inefficient. I can tell you, when we did a blockchain calculation, there’s wastage of 40 per cent. That means what you pay at the end of the day, from end to end, you pay 40 per cent more and have not been provided with any [additional] services,” he said.

One example is the launch of our World Logistics Passport, which encourages shippers to deliver their cargoes directly from point to point, instead of using established inefficient trade routes which send freight through multiple destinations unnecessarily.

At DP World, we have fully embraced smart systems to boost digital accountability and make trading relationships and practices more transparent. And we are actively investing in state-of-the-art trading infrastructure that underpins new digital corridors.

However, a key part of efforts to reduce restrictive practices like nearshoring, is to support the World Trade Organization's efforts to strengthen trade governance, increase transparency, and make global value chains more robust.