Multiple threats to global shipping, from labor issues to cybersecurity, are causing deep concern to business leaders around the world as storm damage and stepped up military attacks among Mideast countries escalate dangers to the global economy.
Two-thirds of more than 1,000 executives surveyed for Prologis, the world's largest warehouse owner, report they "lose sleep" over geopolitical instability that's now driving decisions on where to manufacture and store vital goods from food to cars to fuel.
San Francisco-based Prologis, the operator of 1.2 billion square feet of industrial space, released its 2025 Global Supply Chain Outlook survey, conducted with market researcher the Harris Poll, on the eve of its annual Groundbreakers event Wednesday that focuses on innovation.
“There’s certainly more pressure than ever on the supply chain,” Prologis President Dan Letter said Wednesday during a panel discussion at the event, held this year in London.
The survey came as a major strike by dockworkers began a day earlier at some of the nation’s busiest ports on the East Coast. The strike, on the heels of the massive damage by the deadly Hurricane Helene, has analysts concerned about the effects on supply chains and other fallout for the nation's delicate recovery from months of inflation and high interest rates.
It also comes as tensions in the Middle East have escalated with Iran’s recent missile strike on Israel in response to Israel's fight against the Hamas and Hezbollah militant groups.
Vulnerable industries
The strike by about 45,000 members of the International Longshoremen’s Association at 14 ports along the East and Gulf coasts could cost the economy around $5 billion per day, depending on how long it lasts, according to some economists.
Warehousing, agriculture, energy, automaking and transportation could be among the hardest-hit industries by a prolonged strike.
“Look at all the issues going on, whether they be geopolitical in what’s going on in the Middle East, or on the East Coast of the United States — battered by a hurricane over the past week and then two days later, the entire East Coast port complex goes on strike," Letter said. "Tens of thousands of workers not working or moving those shipments, and three of top five ports in the U.S. not operating.”
Prologis CEO Hamid Moghadam forecasts moderate economic growth in the United States, despite the array of supply chain concerns expressed by executives in the Harris/Prologis survey.
“I think the economy is going to be doing reasonably well unless there is a catastrophe in terms of geopolitical forces," Moghadam said. "I don’t know how you can have a recession, with 4% unemployment and easing by the Fed."
Moghadam and former FedEx CEO Fred Smith agreed during a conference panel that they were concerned about remarks from politicians about deglobalization, the process of reducing the connection between countries, particularly in terms of trade and economic relations.
Outsourcing of manufacturing
Moghadam and Smith also said that nearshoring — the outsourcing of manufacturing and other business processes to companies in nearby countries and regions, including Mexico and eastern Europe — would be more common than bringing all manufacturing back to a company’s original country, a process called reshoring.
Most reshoring activity will be reserved for sectors such as computer chips where there are national security concerns, Smith said.
“The reality is, manufacturing employment in the United States peaked in 1979, and U.S. manufacturing employment has been reduced far more by automation and robotics than it has been by the emergence of China" as a global economic power, Smith said.
A prolonged port strike could have “cascading impacts throughout the global economy, not just the U.S. economy,” Lisa DeNight, managing director of national industrial research at Newmark, told CNBC this week.
Even a minor disruption of a couple of days could have “really significant implications for certain industries,” including pharmaceuticals, auto and manufacturing, DeNight said.
She added that “if we look past a week or two weeks, that will require months of recovery. The unpredictability of this issue here is really in play, and it has the magnitude to really throw a giant wrench in global supply chains.”
Luke Haynes in CoStar’s London office contributed to this report.