Bridges to Breakthroughs: How free trade can survive in a protectionist world

The four horsemen

Are we looking at minor threats to free trade, and subsequently minor disruptions, or could this be the start of something bigger? The answers depend on the nature of current threats, but either way, companies at the heart of global trade need to stay informed as they navigate an increasingly murky future.

Beyond the obvious threat of armed conflict, there is the rise of protectionism. For instance, had DHL known that anti-free-trade sentiments in the U.S. would scuttle the TPP, it might not have invested so much into its Cincinnati hub, which Laney said, was made “with the thought that there would be a TPP and larger investments into Asia.”

Whether it’s a physical wall, stretching from sea to shining sea, a massive hiring of enforcement officers at the country’s borders or some combination thereof, the costs of protectionism are sure to be extensive. Despite Trump’s promises, Mexico probably won’t pay. And while there aren’t any defined regulations in place yet, Brexit is likely to scale up operations along the U.K. border, and other countries seem to be following suit.

These costs should be concerning to logistics companies because this industry is one area the government will likely investigate when they are figuring out who pays for these massive personnel and infrastructure costs.

Another threat is a double-edged sword: e-commerce. While Robert Van De Weg, senior vice president of marketing and sales at Volga-Dnepr Group called the new market a, “lifeline for airfreight,” Laney warned that “customs authorities are exercising more scrutiny as a result.” He explained that more insight has customs agents demanding to know “the who, what and where in greater detail … and that’s having an effect on everyday B2B transactions.” Unless protocols evolve to accommodate e-commerce, logistics companies could face costly bottlenecks.

Van De Weg raised another concern, this time more systemic. “We’ve been going through a downturn since 2007.” As a result, he said, “many actors have postponed their asset decisions until better times.” This translates into a looming shortage of aircraft that may happen sooner than expected if the current uptick continues.