By Richie Lin    Photo：CANVA

On April 3, 2024, Taiwan was struck by a severe earthquake with a magnitude of 7.4, located near Hualien City. This event is noted as the strongest earthquake to impact Taiwan since the 1999 Jiji earthquake. The quake led to significant damage, including the death of 17 people, injuries to over 1,100 others, and considerable infrastructural destruction.
 

The impact of the Taiwan earthquake on the global supply chain can be significant, particularly due to Taiwan's central role in the semiconductor industry and its strategic geographic location. Here are some of the key ways such a seismic event could influence the minds of global supply chain stakeholders.

Firstly, Taiwan is a global hub for semiconductor manufacturing, with giants like TSMC (Taiwan Semiconductor Manufacturing Company) leading production. An earthquake can cause temporary shutdowns or damage to these facilities, leading to a ripple effect across industries reliant on chips, including automotive, consumer electronics, and telecommunications. Secondly, Taiwan's ports are vital for international trade.

Damage or operational halts at these ports due to an earthquake could delay shipments and affect global shipping schedules. This can cause significant disruptions in supply chains, particularly for just-in-time manufacturing processes. Thirdly, earthquakes and other natural disasters highlight the vulnerability of supply chains to unforeseen events. Companies globally may increase their focus on risk management, diversifying suppliers, and creating more robust disaster recovery plans to mitigate the impacts of similar events in the future.

In the past 30 years, the developed countries led by USA outsourced the manufacturing of their products mainly to China. This outsourcing strategy boosted China to become the factory of the world combined with the unparalleled power driven by governmental initiatives, substantial labor forces, and foreign investments and technology. It created a most complete supply chain in one single country in the history.

No matter what kind of products you want to buy, you can always find a full-fledged supply chain in China, especially in Guangdong, Jiangsu and Shanghai. People in developed world such as USA and European countries are all depending on China to provide their daily products such as clothes, shoes, houseware, furniture, and mechanical products.

However, the geo-political tensions between super powers and the natural disasters work hand in hand to increase the inclinations to set up multiple factories in different countries. The paradigm has shifted from finding one easily controlled centralized source to relying on multiple sources which can work independently and fill the gap if some sources face problems. This is forcing global manufacturers to set up new production sites around Asian countries such as Japan, South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia and Bangladesh, all the way to Gujarat, in north-western India. These countries have diversified strengths, from Japan’s high skills and deep pockets to India’s low wages. 

If you are importers and whole-sellers in USA, you will feel more and more stress of managing so wide-spreading supply chain. In the past, you can rely on one single country -China to fulfill all your requirements.

But the geopolitical tensions and natural disasters force you to choose multiple countries to do the jobs of China can do alone in the past. This phenomenon makes suppliers and buyers all face the challenge of multiple points of origin and multiple points of consumption. For example, the transit time and the routes from the ports in India to USA are totally different from those in China. So if buyers purchase products from these countries at the same time, they would need to send purchase orders at different time to make sure the products can arrive to shelves of the stores at their designated time. They need all-around logistics providers to provide logistics from multiple countries to multiple countries including pick up, customs clearance, freight forwarding, warehouse management and last mile door delivery.

First of all, these logistics companies would have broad international network. This means they have established relationships with multiple shipping lines, customs brokers, trucking companies and warehouses in multiple countries which can help them in handling shipments anywhere in the world. Secondly, it is also needed the Expertise in Customs and Compliance: Dealing with international shipments requires thorough knowledge of customs regulations and import/export compliance. Thirdly, the ability to track and manage shipments using advanced technology is crucial.

Look for companies that offer robust real-time tracking tools, Vendor Management Inventory (VMI) , and Warehouse Management Systems (WMS). Last but not least, the customer Service and Communication: Effective communication and proactive customer service help resolve issues swiftly and keep the importer informed about the status of their shipments.

For USA importers and wholesalers, adapting to a multi-sourced global manufacturing strategy not only mitigates risks but also requires sophisticated logistics solutions. By choosing logistics partners with the right capabilities, they can ensure their supply chains are resilient, flexible, and efficient, ready to handle the complexities of today's global market.
 

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.