Navigating A Fragmented World: How Public-Private Partnerships Build Resilient Supply Chains

"In the middle of difficulty lies opportunity" is one of my favourite quotes (usually attributed to Albert Einstein). It sums up how, by having the courage to confront our challenges, we can learn, improve, and create supply chain and logistics solutions that leave the world better than we found it.

And right now, there is no shortage of challenges. ???

From the war in Ukraine to US-China trade tensions, geopolitical rifts are disrupting supply chains globally. These disruptions damage infrastructure, cause delays, increase transportation costs, and reduce the availability of goods. In response, protectionism and regionalisation are on the rise, and new regulations risk limiting trade routes, creating compliance challenges, and hindering free access.

More than a quarter (27.2%) of companies have already had to reduce their supply chain length in response to geopolitical events, according to our Trade in Transition report last year.

Overcoming trade barriers through partnership

Unfortunately, barriers to trade are barriers to growth. Which is why I admire the World Trade Organisation's (WTO) progress in strengthening trade governance under the skilled leadership of Dr. Ngozi Okonjo-Iweala.

However, the public and private sectors must come together to support trade reform, resist protectionism, and achieve even more.

Some of the most important work we do at DP World is contributing our expertise in support of trade policy negotiations. We have a responsibility to advocate for free trade and support the strategic partnerships that are so essential for maintaining emerging markets' access to global trade routes. As well as helping maintain alignment with the World Trade Organisation's rules-based trade framework.

In India, the Comprehensive Economic Partnership Agreement (CEPA) is removing barriers and providing greater access between India and the UAE. This agreement deepens ties by eliminating more tariffs across more than 10,000 product lines over ten years. It has already increased bilateral trade by 15%, to $76.9 billion, with this total set to reach $100 billion over the next five years. Additionally, in support of the government's Maritime India Vision 2030, we have partnered with the Indian government in the first-ever public-private project to develop a network of container terminals along India's coastline, bolstering the export capabilities of regional businesses.

The African Continental Free Trade Area (AfCFTA) has similarly boosted income for people across the continent. AfCTA has helped lift millions out of poverty by addressing trade bottlenecks, fostering regional collaboration and encouraging critical investment in resilient physical infrastructure. Our partnership with development finance agency CDC group is an excellent example of how this investment can be delivered, with $1.72 billion spending on logistics infrastructure modernising ports in Senegal, Egypt and Somaliland.

All of the above demonstrates what's possible, and I am confident that this vital work will help to increase trade, create jobs, and broaden access to essential goods. It will be a showcase for how we can diversify global trade opportunities for emerging economies.

That said, while public-private partnerships (PPPs) and trade agreements offer numerous benefits, they also bring challenges that must be addressed to ensure their success and sustainability. Strong ethical alignment is required between business and government, to balance long-term vision and public welfare with the reasonable expectation to make a fair commercial return on investment, in due course. Legal and compliance frameworks must not become prohibitively complex (and therefore expensive). Political instability can increase financial risk at short notice, and without skilled management, infrastructure projects are often at risk of overrunning budgets. Proper governance, transparency and accountability are also required to earn and retain the public's trust.

Paperless trade and 'single windows' drive digital efficiency

An effective technology strategy for unlocking the value of regional free trade agreements and strategic partnerships is the digitalisation of the traditionally paper-based trade processes. Once fully implemented, it could boost global exchanges by as much as $1 trillion per year and reduce global trade costs by 14%. Yet less than half (47%) of world governments have fully implemented digital trade.

The private sector has an important role to play in accelerating the digitalisation of emerging economies. Earlier this year, at the 13th WTO Ministerial Conference, we called for the urgent digitalisation of customs, via adoption of the 'Single Window' (SW) initiative under the WTO’s Trade Facilitation Agreement. For example, at DP World, we have developed CARGOES Customs, a platform that streamlines the customs clearance process and are ready to work with governments around the world to support this transition.

The promise of sustainable infrastructure

Equally important is increased investment in resilient and sustainable infrastructure for multimodal logistics. We cannot reach net zero in isolation. And so must work with governments, other businesses, NGOs and local communities when designing, constructing and operating infrastructure projects. Together, we can ensure they are environmentally responsible, economically viable, and socially inclusive – throughout their entire lifecycle.

For example, we are increasing the use of renewable energy to power our equipment at the port of Santos, one of the most modern multipurpose private terminals in Brazil. The first major change underway since early 2023, which will contribute to Brazil's efforts to pivot to a greener economy, is the replacement of the fuel used in RTGs (container handling cranes) with electrical power.

Now is the time for action

The path to resilient supply chains and economic growth lies in the synergy between public and private entities. Governments can develop clear, transparent policies that encourage private sector participation in infrastructure projects, such as tax incentives, grants, and subsidies for sustainable projects. And business leaders must engage with policymakers to advocate for favourable regulations and incentives that support sustainable infrastructure initiatives.

I encourage my friends and colleagues throughout the global logistics industry to play an active role in advocating for multilateral trade negotiations: In the?WTO Business Survey, 60.9% of respondents felt business representatives should be permitted at WTO meetings. Through open collaboration and the courage to see the opportunity in every difficulty, strategic alliances can deliver the integrated and sustainable infrastructure we need. While critically assessing and advocating for policies that promote resilience and economic progress - so that trade remains a catalyst for growth.