Rasim Huseynov
Managing Editor of Seamless Trade and International Trade Consultant at Tevolution Ltd
With over half of global maritime trade at risk from geopolitical and environmental disruptions, UK and EU supply chain managers are facing increased potential for delays, rising costs, and supply instability. This report examines critical risks associated with key chokepoints and presents industry-specific strategies, with a focus on near-shoring to secure supply chains. By emphasising locations that offer political stability, regulatory alignment with the EU, and robust infrastructure, near-shoring reduces dependency on vulnerable, long-distance routes.
Key Maritime Chokepoints and Industry Implications
The Suez Canal and Bab El-Mandeb Strait serve as essential links for Europe’s trade with Asia and the Middle East, handling approximately 12% of global maritime traffic. Recently, geopolitical disruptions, including escalating Houthi attacks, have forced vessels to reroute via the Cape of Good Hope, adding 9 to 17 days of transit time. This delay poses significant risks to sectors heavily dependent on timely deliveries, such as electronics, textiles, automotive, and pharmaceuticals, potentially increasing costs and causing operational slowdowns.
The Strait of Hormuz is a critical artery for energy security, with 20–30% of global oil trade passing through it. UK and EU industries—particularly energy, petrochemicals, and transport—rely on a stable flow of resources from this region. However, they face constant risks from geopolitical tensions and the threat of blockades, which can disrupt oil and gas supplies, impacting production and energy costs in Europe.
The Straits of Malacca and Taiwan are essential for trade with East Asia. The Malacca Strait alone handles 30% of global trade, while nearly 40% of global container traffic passes through the Taiwan Strait. Companies in electronics, automotive, and machinery are especially vulnerable to disruptions here, facing potential delays from geopolitical tensions, piracy, and rerouting challenges, with few alternatives for rapid redirection.
The Panama Canal is vital for trade connecting the Atlantic and Pacific Oceans, especially for goods traveling between Latin America, the UK, and the EU. However, severe droughts exacerbated by El Niño have restricted canal capacity, delaying the flow of agricultural products, raw materials, and chemicals to Europe. Industries relying on these imports may face higher costs and supply gaps.
The Bosphorus Strait links the Black Sea to Europe, facilitating the transport of oil, natural gas, and agricultural products from Ukraine. This chokepoint is essential for energy and food security in Eastern and Southern Europe, yet it is highly congested and sensitive to political shifts, impacting sectors dependent on stable access to energy and agricultural supplies.
Near-Shoring and Reshoring Recommendations for UK and EU Supply Chains
To reduce reliance on high-risk maritime routes, near-shoring offers a reliable alternative, strengthening operational resilience and reducing transit times. The following countries provide strategic advantages, including political stability, skilled workforces, and EU-aligned regulatory frameworks, making them ideal near-shoring locations for UK and EU companies.
Turkey has established itself as a key manufacturing hub in textiles, automotive, and electronics, benefiting from competitive labour costs and a well-developed industrial base.
Turkey’s Customs Union agreement with the EU allows tariff-free movement of many goods, while its NATO membership provides strategic security. Turkey remains highly advantageous for textiles, machinery, and automotive components. Its location near Europe and the Middle East offers flexibility for companies needing access to these markets.
Poland emerges as a strong option for near-shoring, especially for automotive, electronics, and machinery industries. The country’s skilled workforce, extensive infrastructure, and central location in Europe make it an ideal hub for rapid distribution across the continent. While recent political shifts toward centralized governance have raised some EU concerns, these risks can be mitigated by regularly monitoring policy developments and using flexible contracts. Poland remains particularly effective for companies looking to establish a central European base, though backup partners in the Czech Republic or Romania can help distribute risk.
The Czech Republic offers a stable and EU-aligned environment, known for its advanced manufacturing capabilities, particularly in the automotive and machinery sectors. As a NATO member and an integrated part of the EU regulatory framework, the Czech Republic provides a secure environment with predictable governance, making it a low-risk option for companies seeking long-term near-shoring solutions. Automotive and machinery manufacturers can benefit from its strong logistics network and access to skilled labour, reducing lead times and exposure to maritime chokepoints.
Romania provides an attractive alternative with competitive labour costs and a growing electronics and manufacturing sector. Its geographic proximity to both Eastern and Southern Europe enables easy distribution, making it an appealing option for industries like electronics, textiles, and food processing. As a stable EU and NATO member, Romania offers regulatory predictability and security, making it an effective choice for companies looking to diversify and establish cost-effective production close to European markets.
Portugal is a strong candidate for near-shoring within Western Europe, with a skilled labour force and established infrastructure in electronics, textiles, and technology. As an EU and NATO member, Portugal offers a secure, EU-aligned environment and Atlantic access, which is valuable for industries targeting the UK and EU markets. For high-tech, textiles, and electronics sectors, Portugal provides a reliable option within the EU, supporting companies that prioritize regulatory alignment and political stability.
Morocco serves as a cost-effective near-shoring alternative in North Africa, with growing capacities in textiles, automotive, and electronics. Its free trade agreements with the EU and close proximity offer reduced transit times and costs for UK and EU supply chains. Although Morocco is not part of the EU or NATO, its political stability and strong trade relations with Europe make it a strategic option, particularly for companies in textiles, agriculture, and automotive components. Morocco’s geographical proximity to Europe supports reduced lead times and enhances supply chain flexibility.
Additional Risk Management Strategies
In addition to near-shoring, UK and EU companies should implement several risk management strategies to further strengthen supply chains.
First, diversifying shipping routes and transport modes can significantly mitigate risk. For high-risk areas like the Suez Canal and Malacca Strait, companies should explore alternative routes, such as the Arctic passage or the Cape of Good Hope. Multimodal transport that combines sea, air, and rail allows for flexible shipping of critical goods and reduces dependency on specific chokepoints.
Second, investing in real-time tracking, AI, and digital twin technologies can provide real-time visibility into disruptions, enabling proactive management of stock levels and shipping schedules. AI-based monitoring systems allow companies to react swiftly to route closures or delays, while digital twins can simulate disruption impacts, facilitating planning for alternative routes and optimal stock levels.
Third, maintaining strategic stockpiles and regional warehousing will help buffer against disruptions. Industries such as electronics, energy, and food processing should consider maintaining a minimum of 3–4 weeks of stock in key locations. Expanding warehousing capacity in Western, Central, and Eastern Europe will further support flexible distribution, allowing companies to manage sudden demand changes and rerouted shipments.
Flexible contracts and local partnerships are also vital. These allow companies to adapt to policy and regulatory shifts, particularly in countries where political environments may be evolving. Building partnerships with local firms strengthens resilience, providing companies with local knowledge and networks to navigate regulatory changes smoothly.
Lastly, enhancing security through collaboration with EU and UK authorities will help secure vulnerable routes. In high-risk maritime areas, companies should consider military or private escorts for valuable shipments. Collaboration with Turkish authorities, for example, can bolster security for shipments through the Bosphorus, while UK and EU government coordination can improve safety for energy and high-value goods transiting the Strait of Hormuz.
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