The Storm Before the Storm: Q1 2024 Supply Chain Outlook

Mexico’s proximity and preferential access to the US market will remain its main competitive advantages to attract nearshoring investment, and Mexico already has surpassed mainland China as the largest supplier to the US. However, the scheduled review of the United States-Mexico-Canada Agreement (USMCA) will generate uncertainty over trade rules until 2026.

S&P Global Market Intelligence.

• Physical operations present the biggest challenges for supply chains at the start of 2024, with conflict in the Middle East and climate change disrupting shipping networks. The prospect of accidents in the South China Sea triggering further challenges cannot be ruled out. Labor strikes may generate further friction.
  
  
• Politics introduces a renewed round of uncertainty throughout the year thanks to widespread elections. The rise of protectionism and retaliation, which got underway in 2023 may spread in 2024 with the real impact only coming in 2025. The cost of environmental policies may widen in coverage and rise in cash terms. More positively there’s the prospect of new trade deals ahead.
  
  
• Trade and supply chain activity has stabilized and should recover in 2024, particularly in hard-hit non-AI electronics.
  
  
• Decision-makers can prepare for future problems by investing in resilience and agility. Strategies that cut risks but increase expenses, including inventory increases and supplier diversification, are falling out of favor. Reshoring, which can cut costs as well as risk, will remain in favor but involve a careful balancing of operational, transportation and political risks.
  
  

Gain vital insights on global trade and supply chains with our Q1'24 Outlook report. Download our research for an in-depth analysis.

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S&P Global Market Intelligence. We provide essential insights for our clients through powerful business intelligence solutions that combine comprehensive data, actionable analytics

S&P Global Market Intelligence. We provide essential insights for our clients through powerful business intelligence solutions that combine comprehensive data, actionable analytics