Global supply chains and trade have been facing no shortage of challenges in the past few years. Factors ranging from Covid-19 pandemic disruptions to Red Sea tensions have driven freight rates up and affected deliveries. Trade tensions, too, have resulted in tariffs and affected world trade in certain goods. Just this week, strikes at the U.S. East Coast and Gulf Coast ports are threatening to disrupt global supply chains. With trade barriers rising amid greater levels of geopolitical tensions in recent years, investors in the logistics and shipping industry are concerned about the extent to which this is driving a broader deglobalization of trade — and a “shortening” of supply chains, Goldman Sachs said in a Sept. 25 report. “Higher levels of geopolitical tensions in recent years have in our view structurally increased supply chain complexity, whether in the form of higher tariffs, non-tariffs, sanctions or even physical barriers (e.g. Red Sea disruption and closure of Russian air space),” the bank’s analysts wrote. The market for companies in this space is driven by the volume of global trade, and this so-called supply chain “complexity,” Goldman noted. “The implication of this for the Logistics & Shipping companies in our global coverage is slower or even in some cases negative long-term earnings growth, and we believe the risk of this is already weighing on general investor sentiment on the space,” they added. But Goldman believes that although deglobalization could lead to falling profits, it also sees opportunities. “Sourcing from multiple countries, with customs and other barriers rising, amid greater levels of supply chain vulnerability and increasing automation and digitization requirements simply brings more work and profit opportunities for Logistics companies,” it wrote. ‘Well-positioned’ companies However, there are still “well-positioned” companies in this space, Goldman said. It sees some stocks as being able to benefit from higher supply chain “complexity.” Freight-forwarding firms such as DSV , DHL Forwarding and Kuehne+Nagel are “well-placed to help their clients navigate higher complexity and shocks,” Goldman said. They could offer combined sea and air solutions to “deal with short-term crises” as well as meet demand for loads that use less than one container — to allow clients to save money amid higher freight rates, according to Goldman. Express shipping players such as DHL, Fedex and UPS could benefit from more frequent supply chain disruptions — as they increase demand for faster international shipments and air cargo space, the bank added. Container lines such as Cosco, Maersk and Hapag-Lloyd are less directly exposed to the higher supply chain complexity, said Goldman. But Maersk is already getting ahead — by pursuing a strategy of combining shipping with “more advanced” logistics services. “Disruption events have recently contributed to tightening the market in favor of shipping lines, although the supply-demand dynamics depend on the type of disruption event, some of which could also have negative implications,” said Goldman. — CNBC’s Michael Bloom contributed to this report.
