One survey suggests that the world is bracing from labor shortages and regional disruptions due to unpredictable geopolitical tensions this year

Based on a survey* of 3,500 senior executives across six industries and all major regions (North America, Europe, the Asia Pacific region [APAC], the Middle East, Africa and South America) about sentiments towards global trade supply-chain strategies for 2025, the following trends were noted at the 2025 World Economic Forum in Davos.

First, 33% of businesses polled in APAC were creating parallel supply chains to avoid disruptions caused by geopolitical risks, while 29% cited they were creating dual supply chains to cater for the Chinese and US markets.

Second, the moves were deemed as part of three key trends driving the evolution of trade dynamics in the APAC region: Strategic diversification to manage risks and regional pressures; the leveraging of government intervention and reconfiguration; and the adoption of technology adoption to overcome labor shortages and boost operational efficiency.

Other findings

Third, according to 71% of the executives interviewed, non-aligned countries such as Vietnam, the United Arab Emirates and Mexico have been increasingly seen as supply-chain safe havens by acting as politically insulated trade partners. However, 63% of respondents cited worries about regulatory inconsistencies that could undermine the ability of non-aligned countries to serve as reliable intermediaries. Some 27% of respondents saw expanding into more stable markets as the best way to deal with geopolitical tensions. Also:

  • 34% of respondents cited relocating supply chains to politically aligned countries, or “friend shoring” to reduce geopolitical risks. However, as President Trump’s tariffs-based approach to international relations takes hold, determining which nations qualify as allies (and how long they will remain so) will become an increasingly complex calculation for supply-chain planners. Also, the incumbent safe havens still rely heavily on Chinese inputs.
  • 46% or so of respondents were diversifying geographically to enter new markets and hedge against disruptions, while 42% were localizing supply chains to cut transport costs and improve oversight. A calculated mix between the two approaches could be the right answer, by sourcing materials from multiple regions to reduce reliance on any one geography while shifting production closer to key markets for greater control and agility.
  • 20% of respondents saw building inventories as the best strategy for resilience, compared with 42% who favored diversification across suppliers and regions. Most respondents were trimming their inventory buffers to 8.6 weeks in 2024 (previously around 10.2 weeks in 2022) while casting a wider net for suppliers to ensure flexibility when shocks occur. About 37% felt that inventories and diversification were equally effective, tending towards a dynamic balance.
  • Three-quarters of respondents were diversifying their supplier base, spreading risk and increasing resilience by working with more partners. About 25% preferred to work with fewer providers as a deliberate strategy. Working with fewer suppliers brought benefits such as higher quality and consistency (38%), stronger, trust-based relationships (35%) and lower administrative costs (28%).

Said Glen Hilton, CEO and Managing Director (Asia Pacific), DP World, the firm that shared its survey findings: “The Asia Pacific region is in an era of significant transformation. As businesses in the region implement bold strategies — diversifying supply chains, capitalizing on regional trade deals and adopting frontier technologies — to drive expansion, they must also balance ambition with caution to sustain momentum in the face of global geopolitical instability.”

According to John Ferguson, Global Lead (New Globalisation), Economist Impact, the firm providing content for part of the data analysis: “In 2025 and the foreseeable future, global trade will be shaped by three forces: shifting geopolitics; climate change; and a new wave of AI and automation. Yet, businesses are not retreating from international trade but are stepping up to the challenge. Firms that stay agile and cost-efficient will have the edge. Firms that also combine risk management with AI experimentation and openness will be best placed to win in this new chapter of globalization.”     

*with additional data from interviews with trade experts and senior executives from various regions and industries, and also a natural language processing method to measure the frequency of key terms across a vast body of text from reports from the Economist Intelligence Unit spanning 1996 to 2024.