Just because the COVID-19 crisis has passed, doesn’t mean everything returns to the way it was before. Supply chain disruptions, for one, are here to stay, according to Marissa Adams, managing director, Americas head of global trade solutions for HSBC, New York. In fact, she believes the pandemic was a wake-up call that exposed vulnerabilities in the supply chain—and there’s no going back.

“I don’t think that there is a normalization anymore. I think that what companies are now facing is that supply chain disruption is the new norm,” she said.

Her statement is supported by a June 2024 report from HSBC citing some of the factors that could potentially obstruct trade flow, such as geopolitical uncertainty and other issues in specific geographic regions that have caused some ships to change routes: for example, drought impacting the Panama Canal or Red Sea attacks. In an era of growing nationalism, more than one-quarter of the global population will be voting this year; the results could affect trade.

Supply chains are complex. Given inflation, some suppliers must secure financing. Since the major supply chain holdups during the early 2020s, Adams said the mindset shifted from thinking of goods being purchased “just in time” to stockpiling them “just in case.” That has added to the financial picture for many companies.

Rather than follow the old method of trying to reduce the cost of goods to improve the bottom line, many companies are now striving to move operations closer to home, thereby reducing shipping costs and adding security to their supply chain.

However, Adams said, “Even when things are produced here in the United States, there’s a number of different components that are produced in Asia, in Europe, in other markets around the world.”

The best way to deal with this new situation, Adams believes, is for companies to assess risk to their supply chains. “Where do they see risk?” she asked. “Are there certain suppliers they have a concentration on, or are there countries where, potentially, there’s more risk around it?”

For companies, she recommends a holistic view of their supply chains. “Don’t just look at one category of your products,” she said. “Do you have a geopolitical risk in one country versus another? Is there a risk from a transport aspect in another country?”

In addition, she suggests investors learn about the strategy of a company’s senior leadership. Is the CFO talking about supply chain resilience? How concentrated is the company in key sectors and markets? Is the company investing in its supply chains in a diversified manner to avoid unnecessary risk?