Supply Chain News Roundup: Bracing for the Impacts of Another Conflict

Perhaps the two biggest supply chain-related news stories of the week were intertwined by President Donald Trump departing the G7 meeting in Kananaskis, Alberta.

Not long after Trump and British prime minister Keir Starmer announced that the U.S. and United Kingdom (U.K.) have reached a trade deal that will cut tariffs on U.K. auto and aerospace imports but left duties on steel unresolved, the president returned to Washington, reportedly to focus on the escalating conflict between Israel and Iran, which is in its fifth day.

The supply chain implications, in both cases, are developing or too early to tell. Regarding the trade deal, the U.S. agreed to exempt U.K. metals, but only up to an unspecified quota. The potential impacts of hostilities between Israel and Iran in the region that produces a third of the world’s oil is much more sobering.

“It’s far too early to speculate on the impact of the conflict, as the range of possible outcomes is very broad — from ‘nothing’ to nuclear conflict launched from either party,” says Paul Archiopoli, C.P.M., CPSD, CPIM, CMFGE, Institute for Supply Management^® (ISM^®) Subject Matter Expert. (For more on this topic from Archiopoli and other ISM experts, see next week’s Supply Chain Roundtable.)

The regional dynamics are intensified by the fact that global shipping has already been stressed by such geopolitical disruptions as the war between Russia and Ukraine, Israel’s conflicts with Hamas and Hezbollah, and Houthi rebel attacks on ships in the Red Sea. As they asses the fallout of the latest flight, some tanker owners have paused their vessel availability, leading to a spike in oil shipping rates.

Speculation that Iran could restrict traffic in the Strait of Hormuz — a waterway between the Persian Gulf and the Indian Ocean that handles about a fifth of global oil trade — is growing. It’s a threat Tehran has made often, and the U.S. has a significant Navy presence in the strait.

However, some shippers are avoiding the area, and a crash of two tankers in the nearby Gulf of Oman added to the tension.

“The last 96 hours have been very concerning … both for the region but more broadly in terms of where the global energy system is going given the uncertainty and the backdrop that we see right now and the geopolitical volatility,” Shell CEO Wael Sawan told CNBC.

Most Companies Lack AI Supply Chain Strategy

Despite strong interest and investment in artificial intelligence (AI), only one in four companies have adopted a formal supply chain AI strategy, Gartner research shows. Not having such a strategy can lead to problems down the road, the Stamford, Connecticut-based consultancy and advisory says.

“CSCOs feel pressure to achieve short-term ROI from their AI investments, but they must ensure these quick wins don’t create future constraints,” Benjamin Jury, senior principal, research in Gartner’s supply chain practice, said in a press release. “Without a structured approach, organizations risk creating inefficient systems that struggle to scale and adapt to evolving business demands.”

In December and January, Gartner surveyed 120 supply chain leaders who had implemented AI systems within the previous 12 months. Among other findings:

• Most chief supply chain officers focus on “project-by-project” short-term wins rather than long-term investment results.
• Efficiency, cost and other bottom-line metrics are generally used to gauge AI investment success. Increasing revenue and innovation are ranked lower.

To achieve short-term as well as long-tern benefits, Gartner recommends developing not only a supply chain AI strategy but implementing a run-grow-transform framework and investing in AI-ready infrastructure.

Imports Flow to L.A. Likely to Stay ‘Modest’

Earlier this year, Port of Los Angeles executive director Gene Seroka projected a significant decrease in traffic due to tariffs. The impact was felt in May.

Imports to the L.A. port dropped 19 percent compared to April and 9 percent year over year, as the facility processed 355,950 20-foot equivalent unit containers.

That decreased traffic ripples through the logistics sector, Seroka said in a press conference last week: “If you’re a trucker who was hauling four or five containers a day prior to these announcements back in April, today, you’re likely hauling two or three loads,” he said.

Although the U.S. and China agreed to a tariffs pause, duties on many Chinese good remain at 30 percent — still a significant expense for importers. “I expect overall cargo flow to remain modest for the balance of 2025,” Seroka said.

(Image credit: Getty Images/Grynold)