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Companies race to work around choke points in world trade

Geopolitical risks are driving efforts to diversify but there are no quick solutions

It is a year since New York Federal Reserve economists unveiled the Global Supply Chain Pressure Index. The barometer of port backlogs and freight costs, looking back over 25 years, showed that constraints on moving goods around the globe peaked in late 2021, at a level for which they could find no precedent.

The gauge started to fall as economies slowed, and as Covid-19 disruptions eased. Then Russia invaded Ukraine. As governments and multinationals scrambled to navigate the fallout, the index eased back, only for progress to be stalled by an upsurge in Covid-19 cases in China as 2022 ended.

Michael Farlekas, chief executive of freight-booking software company E2open, likens his clients’ response to the stages of grief: “At first you’re shocked, then at some point you reach acceptance.”

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