1 Major Issues in Global Supply: Chain Management Today The book opens with a view of current world events that impact global supply chains, import and export operations, and the entire responsibilities that business executives have in trade compliance management. 2011 and into 2012 have seen a number of shifts in world politics, Middle East stability, and major physical occurrences that have huge short-term impacts on global trade, and these impacts may extend into the future for years to come. Overview Physical Events The earthquake in Japan has rocked the world in a number of ways. Perhaps most important, the long-term utilization of nuclear power is very much in jeopardy. The impact of the devastating tsunami that followed goes far beyond the tragic loss of life that occurred. The insurance community who insured the risks involved with both events will have to pay hundreds of million in claims, potentially in excess of several billion dollars. This will impact insurance costs and the availability of certain types of insurances in risk-prone centers of t he globe as well as for freight that moves on certain trade lanes. Cost and availability will become major issues.

Personnel involved in international shipping and logistics who had freight coming in and out of Japan are witnessing great delays in transit times, limited access to transportation infrastructure, and increases in freight charges. Shipping managers worldwide have looked at this disaster in Japan and have already begun to access risk management alternatives not only in earthquakeprone areas, but in all corners of the globe where there are significant physical risks such as but not limited to: * Earthquakes * Floods * Tornadoes * Hurricanes * Harsh changes from winter to summer weather patterns * Tsunamis These are but a few of the major physical exposures that companies who operate globally are now assessing, and they are reevaluating their supply chain decisions to avoid exposure and mitigate risk. Economic Events As of this writing, most professional assessments and benchmarks in world trade have shown a betterment in most market segments in the overall economy. Most manufacturing, inventory, and trade indexes have shown increases of 3 to 6 percent in 2011 into 2012. While most sectors have shown improvement, there is still serious concern over the following areas: * Stability of global banking and financial infrastructure. * Housing and unemployment in the United States. * Political instability in the Middle East. * Financial issues in an array of countries, such as but not limited to Greece, Poland, Brazil, Venezuela, and the United States.

* The rise in government bailouts and increase in debt worldwide. All of this impacts global supply chains. It impacts cost, risk, and choice of global sourcing and offshore manufacturing, and it potentially retards the growth of globalization. A good example of this in the United States is shown by the number of companies who had sent manufacturing overseas to Asia and the Near East but have moved some or all of it back here to America or to Mexico or Canada (referred to as ''''near-shoring''''). Near-shoring makes a huge statement to the world. It says that from a competitive standpoint there may be better places to locate operations than Asia and the Near East (primarily India and Pakistan)--reversing a major trend of the past thirty years. In logistics, these economic woes have reduced capacity in the ocean freight market, causing pricing instability and difficulties in locating available containers and chassis for timely, reliable, and consistent bookings. Companies relying on the ocean freight mode to fulfill a time-sensitive supply chain have been hugely disappointed in 2011 and have had to make major compromises in risk, cost, and choice of carriers.

Political Instability The events in the Middle East--in Tunisia, Libya, Egypt, and Bahrain to name a few--have rocked the traditional world of dictatorship and kingdoms in terms of historic attitudes in the Muslim community in that part of the globe. The West, led by the United States, has taken a fairly aggressive role in supporting the move to democratic governments, including military action. There are costs to supporting these uprisings that add to the economic turmoil, tied into the instability which has caused the price of crude oil to climb in excess of $100.00 US. This will impact every aspect of the supply chain cost models, from manufacturing, to plastics, freight, and security surcharges due to gasoline increases. The threat of an increase in terrorism promised from the more radical corners of that circle will place additional stresses on security and oil costs. Many security analysts also see the West''s proactive engagement in these Muslim democratic turnovers as another reason for terrorists to mount more aggressive and frequent attacks, which will include exposure for global supply chains. The continued presence of the United States and its allies in Iraq and Afghanistan has also increased political stress among the West and the Muslim countries.

These stresses impact politics--here and in those countries--which in turn impact the decision-making process as to where and how to ship, source, deliver, and partner. These issues increase risk and cost. Airfreight: TSA/Transportation Security Administration and Hazardous Materials 100 percent cargo screening, not just for Americans anymore! The screening rules of 2010-2012 affected all air cargo destined for a passenger aircraft originating in the United States or being shipped from overseas to the United States. The TSA was charged with this daunting task. While the shipping community doubted the TSA would be able to accomplish the 100 percent screening rule by the initial 2010 deadlines, the TSA proved us wrong. They have accomplished this task and have done it without too many hiccups in the process. This process is still a work-in-process and is being tweaked and modified as we enter 2012. The fear and overall concern were mainly twofold: the issue of higher costs and the issue of serious delays in the movement of air cargo.

While there has been a cost increase due to the additional layer of security that has been imposed, i.