Ripples in water: how the Suez Canal blocking disrupted supply

Marcel Salikhov, Director of the Center for Economic Expertise of the Higher School of Economics, commented to Gazeta.ru on the consequences of the Suez Canal accident for international trade.

Manufacturing and trading companies will increase inventories and rely more on suppliers that are geographically closer. That is, the trend towards "regionalization" of international trade, which began last year, will continue, Marcel Salikhov, Director of the Center for Economic Expertise at the Higher School of Economics explains.

“The current problems in cargo transportation after the accident in the Suez Canal are exacerbated by the fact that in recent years supply chains have become increasingly 'thin', that is, more and more dependent on how the provision of raw materials/goods and products is carried out.

To keep costs down, many companies have reduced inventory levels as part of a lean production approach. The downside is that supply chains have become very dependent on any disruptions,” Marcel Salikhov told to Gazeta.Ru.