October 22, 2024 — Thanks to their experiences during the pandemic, large European companies have become much more skilled at overcoming disruptions to their supply chains. Today, they are managing to work around a new set of obstacles to keep businesses running and international trade flowing. 

Global supply chains never entirely normalized from the chaos of COVID-19. Instead, the supply chain issues that crippled global trade from 2020 to 2022 have been replaced with a new set of disruptions. The long list of potential disruptions includes attacks in the Red Sea, war in the Middle East and Ukraine, trade tensions between China and both Europe and the 
U.S., inflation—especially in energy and commodity prices, and elevated interest rates that have hiked funding costs. 

Roughly half of large European corporates say they have avoided negative impacts from these and other supply chain disruptions over the past year, according to data from Coalition Greenwich. That is a dramatic change from the recent past. In 2023, roughly 60% of companies were experiencing negative effects of supply chain issues. In 2022, about three-quarters of large corporates were feeling negative effects.

“That fact that half of companies have not experienced negative impacts in the most recent year is almost certainly a reflection of the strategies and solutions they have adopted to make supply chains more resilient,” says Dr. Tobias Miarka, Head of Corporate Banking at Coalition Greenwich and author of European Companies Learn to Navigate New Wave of Supply Chain Disruptions.

Continued supply chain headwinds have contributed to a moderation in trade flows into and out of Europe, pushing overall volumes down from the peak of the post-COVID recovery. 

“Those volumes could have been significantly lower absent successful efforts by European corporates to mitigate the impact of these disruptions,” says Melanie Casalis, Research Director and co-author of the report. “Lessons learned in the COVID era are helping corporates navigate an increasingly diverse set of supply-chain challenges, and strategies put in place to overcome past challenges are bearing fruit in the form of more resilient corporate supply chains.”

Fewer Corporates Focused on Near-Shoring
In 2022 and 2023, nearly half of large European corporates said they were working to diversify supply chains. In 2024, that share fell sharply to just 29%. Coalition Greenwich believes there are two main reasons for this drop-off. First, many companies that began diversifying supply chains during the pandemic have largely achieved their goals, with European companies now tapping an extended network of suppliers in countries like India, Vietnam and Turkey, as well as in Western and Eastern Europe. Second, some companies that adopted near-shoring as a strategic goal have experienced significant challenges, leading at least a portion of them to slow or even abandon efforts to bring supply chains closer to home. 

“We believe some companies that originally sought to mitigate supply chain risks through onshoring have been discouraged by price increases and other challenges and are now seeking other solutions to make existing supply chains more resilient,” says Dr. Tobias Miarka. 

European Companies Learn to Navigate New Wave of Supply Chain Disruptions reviews recent developments in corporate supply chains and international trade into and out of Europe, and provides a detailed analysis of the banks, products, solutions, and platforms European companies use for trade finance.