Global supply chain worries hit a record high
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Hello and welcome to World Business Report from the BBC World Service. I'm Roger Hearing and on this edition, a crisis of confidence for those shipping goods around the world. A new survey suggests a record level of concern among shippers. We'll have the details. As the US pursues trade deals with major players, we'll find out what's happening in the talks with India. Also, why is it that cassava, a major food source across the world, doesn't make more money for Nigeria?

And Prada acknowledges its latest footwear is actually something Indian artisans have been making for centuries. But let's start with food supply chains. It's been a challenging time for those who are trying to move stuff around the world.

Trade wars, tariffs and turmoil mean that global supply chains are in trouble, and they know it. The latest survey, CIPS Pulse Survey by the Chartered Institute of Procurement and Supply, shows sharp rises in concern over supply chain disruption at the highest level since tracking began.

Ben Farrell, CIPS CEO, told me what the survey showed. Our members are calling out the geopolitical risks, particularly the conflict in the Middle East, clearly preeminent, but on the back of the trade wars, the tariffs. So one way or another, the level of anxiety related to disruption and uncertainty around global supply and procurement of goods, which are moving around through these supply chains, is unbearable.

Actually, you know, at an unprecedented level, one is reluctant to use the unprecedented word. But genuinely, I think those of us who've been involved in this business for some time have never seen this level of anxiety in the leaders of global supply. So pretty, pretty, perhaps not that surprising, but pretty stark stuff. So worse even than Covid, for example?

Yeah, we're heading in that direction. I think one of the things that is worth bearing in mind is the nature, the growing nature of the interconnected supply chains around the world. So where you can see, for example,

through our members, you know, concerns around things like Israeli manufactured goods, phosphate derivatives used in water treatment, for example, that's popping up in different parts of the world. At the same time, there's different bits of tech which are being disrupted through supply chains. So one way or another,

is not a single issue. There are a number of different issues. And this highlights to me the tactical nature of where we are. We can describe today, tomorrow, in the coming months. But actually, when you take a step back, the world is so connected now. And I think we need to sort of be cognizant of that in our sort of international relations and the way this is all playing out. I mean, I think supply chains historically have always been disrupted in some way before

The consequence of disruption now is much more profound than it's ever been in history, I think. Well, that was what I wanted to pick up, the consequence, because obviously one assumes it's going to be higher prices. Well, you can see a bit of it emerging. You know, our members are reporting particular anxiety around input prices in shipping, logistics, petrochemicals, pharmaceuticals, food and beverage markets.

There's some fabricated metal products, perhaps unsurprisingly, given what we've seen around steel. So those are input prices. And you could reasonably expect those to flow through to some extent. You might see things like shipping and logistics inflation having a trickle-down effect into higher prices and things, perhaps furniture, electronics. Generally, things are moving. And equally, you'd expect some fuel prices perhaps

perhaps, flowing into, you know, the costs of the pumps. There's a bit of volatility in it. We can't be certain. Only last week we were talking about the Straits of Hormuzan, the impact of that, and that's died away. We saw the, you know, the fuel prices go up and then dive again. So it's really, it's just a backdrop of uncertainty. And all these guys are now, you know, expert risk managers, expert replanners, and highly responsive. Indeed. But I suppose, Ben, if we wanted to sort of try and see a bit of light at the end of the tunnel, I mean...

The immediate Middle East issue hasn't gone away, but it's clearly slightly the heat has gone down, at least in the last week or so. And also, you know, we do know the US government is negotiating with numerous countries in terms of bringing the tariffs as part of a trade deal. So could we see next survey perhaps rather better? You genuinely could. I suppose the story is a bit of volatility. So maybe this is, you know, for governments to start thinking to what extent is their nation dependent on...

on international supply chain and how satisfied are they that that is not a risk to national resilience longer term. So I think there are bigger questions. You're probably right, next month we'll see a better picture emerge. But behind it, I think there's a more strategic question about resilience in nations and businesses related to supply.

Ben Farrell there of the CIPS. Well, part of the real-world consequence of this is congestion in ports. Backlogs now growing in places like Rotterdam, Europe's largest seaport, which handles around 30,000 ocean-going vessels and 130,000 river barges every year. Well, the port's director of containers, Hannah Stelzl, is concerned about the effects of the disruption. With all the panic there is in the world today,

I do hope that we will remain to work on reliable products, on efficient and sustainable products, because in the end, what we do it for is to secure supply chains to our societies.

And that is a crucial task, right, in serving as major transportation modes for crucial goods. In the end, it's what's in those containers. It's about food. It's about medicine. It's about crucial materials that we need for our production in Europe. I truly believe that there will be different times again, but these are times where

where we're at a peak of geopolitical developments and technological and sociocultural developments, and they're all peaking at the same time. Hannah Stelzl in Rotterdam. What does all this mean then for those who are shipping the goods? I asked Emily Stausperl, who's Senior Market Analyst at the shipping analytics firm Zanetta.

I don't think it's too surprising, really. We have just so many things going on at the same time. It's kind of leading to this new perfect storm that's causing concern and a lot of disruption for many supply chains. And what is behind it is obviously concern, I guess, about the Middle East situation, diverting ships in various ways, but also the tariffs. Which is the most important factor, do you think?

So I think just in the past few months, the most important factor, especially around North Europe, is the tariffs and how that's shifted volumes and shifted where ships have been put. The situation in the Middle East hasn't changed markedly for shippers who aren't shipping in and out of that region.

The big concern on that is still that they're sailing around Africa rather than going to the Red Sea. But that's nothing new and that's kind of been built into supply chains over the past year. The issue here is really kind of these changing trade flows in response to the trade war. So what would change the sentiment that we heard from the CIPS, do you think? What would give them more confidence? What needs to change?

I think a lot of different things. We need some more predictability in the world at the moment. We're just a few days away now from that 8th of July deadline for an idea of what happens with tariffs on US imports. And everybody's still looking at that. And then we have also strikes at the moment in many areas, especially in Europe and all sorts of other stuff going on. And I think shippers are kind of aware of that fact and that they need to be prepared for that.

And they're going to pass on the costs that they've got, I guess, that come from all this as well. I mean, there's going to be a push in that direction.

They will always try. I think what we've seen in many years in container shipping is that the freight rate you pay for that sea transport isn't directly linked to the costs. And at the moment, actually, we're seeing a sort of softening of rates. So a deteriorating market really for the ocean liners to be working in. So they're going to struggle a little bit more to pass on those extra costs directly on the freight rate. But of course, delays and that kind of stuff, that also adds costs to the system. So what's the best advice for businesses trying to deal with this kind of situation? I mean, how do you...

what's the best way to proceed to make things work better for them? You need to look beyond just kind of getting the cheapest rate. You need to have a relationship with a supplier or whether that's a carrier or freight forwarder that means you can actually call them up and say, hey, we need some help here. And if you've been just negotiating them down to the absolute lowest freight rate, that leaves you vulnerable when things go wrong, as they seem to be doing increasingly often these days. And are you hearing from the people you deal with that they are suffering a lot at this moment, that they're telling you this is a really difficult time?

Yes, with comparisons made to those first few months during the pandemic in many ways. Looking to the US in many ways, both when it comes to tariffs and also what's happening in the Middle East, I think it's clearly doubtful that we'll see any significant changes that will make their lives easier in the coming weeks. Emily Stauspoel there. Well, one of the key problems that's damaging exporters' confidence is...

is tariffs. President Donald Trump's announced and changed the taxes payable on goods being brought into the U.S. on many occasions. The idea, he says, is to get other countries to negotiate trade deals with the U.S., in which many of the tariffs will then be diminished.

Well, one of the big deals being discussed is with India. So, how's that going? Indian officials have been in Washington since last week, hoping to reach a last-minute agreement. Ajay Srivastava is founder of Global Trade Research Initiative, based in Delhi...

So I asked him, what is the main blockage at the moment? A US insistence on India opening its agriculture and dairy sector and also allow the genetically modified produce from the US into India. So India has reluctance in

agreeing to any of those demands. And I want to say that these products account for less than 5% of US exports to India. So India is willing to open 95% of the US exports to India. That is basically industrial goods. And what will India get in return? What are the kind of benefits for India?

What we are hearing is that while India will be cutting its MFN tariffs, these are the tariffs we normally charge on the imports from any country except the FTA partners. The U.S. side, the U.S. president doesn't have the congressional approval for cutting its MFN tariffs.

So all they will do is that US has imposed country-specific tariffs for India, the tariffs for 26%. So they say they may impose not 26%, but 10%. So if I have to summarize, Indian goods have to pay

the US MFN tariffs plus 10% tariffs if the FTA goes through. Right. So that's the benefit side for India. In the end, do you think there is the political will to make the concessions that the Americans want, that the Delhi government are prepared to do that? So when Mr. Trump says that India is a high tariff country and Indian government is

totally open to eliminate tariffs on more than 90% of the U.S. exports to India, I think it makes tremendous sense for me. It's only because of Mr. Trump's insistence that India should open what counts for less than 5% of U.S. exports to India, but very, very sensitive for India, that is agriculture products or dairy or GMO products.

So it's the U.S. insistence, which is not willing to see that India is offering 90 percent of its goods at zero tariff in India. So you see they're holding up. Yeah, what I'm saying, you're seeing it as a price worth paying for a fairly small price for a huge benefit. Yeah, U.S. will have one sided huge benefit. So they should go for the deal if they're smart.

Ajay Srivastava there. Well, one of the business areas where all this really matters is gems and precious stones. They're one of India's major exports to the U.S.,

Dinesh Lakhani is group director of Kiran Gems, the world's largest manufacturer of ethically sourced diamonds, and he's in Mumbai. I asked him if his industry thought the outcome of these trade talks was important. Of course it is supremely important because everybody who is in the diamond industry and India being such a major hub of diamonds, cutting and polishing as well as exporting of diamond jewellery to the rest of the global markets. USA happens to be the biggest market, but

So at the moment, trading conditions pretty difficult for you right now?

That's correct, yeah. In what sort of way? How does it affect you on a day-to-day basis? Retailers in the US, all of them, none of them can take a view on when this tariff uncertainty is going to go away. So there are scenarios that we have been coming across for the last so many weeks now, almost months now. Retailers in the US have demand, consumer demand at their counter, but they can't really cater to it because they can't

ask us, suppliers, you know, for them to ship those goods in US. But these trade negotiations, they somehow, in the complexity of it, they lose the nuances of how it is disrupting even the local US businesses. They don't know what they can procure.

And we don't know when we can supply and so forth. So Dinesh, what kind of deal? I mean, are you saying that any deal is good or is it a particular sort of deal between the US and India in trade terms that would benefit you? For our specific sake, there is a 10% tariff which has been added on the cut and polished diamonds because earlier it was zero. So the baseline tariff of 10%, you know, brought it from zero to 10. The baseline tariff of 10% also meant that the earlier tariff of 6%

became 16 for jewelry. So when we say any kind of deal is going to be good, no, that is not going to really work. We are cautiously optimistic that the sectoral specifications would be taken care of. Because in the B2B trade of diamonds and any other precious jewelry, the margins to begin with from a B2B supplier to a retailer in a developed market

Dinesh Lakhani there.

Over the past 25 years, technology has transformed our world in amazing ways. We've gone from dial-up modems to 5G connectivity and bulky PC towers to AI-powered microchips. Every day, innovators are redefining what's possible. Through it all, Invesco QQQ ETF has connected investors to the forefront of innovation. Access the future today with Invesco QQQ. Let's rethink possibility. There

There are risks when investing in ETFs, including possible loss of money. ETFs risks are similar to those of stocks. Investments in the tech sector are subject to greater risk and more volatility than more diversified investments. Before investing, consider the fund's investment objectives, risks, charges, and expenses. Visit Invesco.com for a prospectus containing this information. Read it carefully before investing. Invesco Distributors, Inc.

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You're with World Business Report from the BBC World Service. Let's talk about what's been going on in the financial world, markets. Joining me is Peter Jankowskis, who's Vice President of Research and Analysis at Arbor Financial Services in Chicago. Peter, thanks for being with us. First of all, I suppose very markedly, a downturn in the dollar at the moment. It's been on the front pages of a few papers. The dollar's having quite a weak time.

Yes, I think this is a direct consequence of the tariff policies. Many of the foreign countries that export to the U.S., of course, are major investors in U.S. treasuries. And, you know, they have pulled back on their purchases and in some cases been selling and then repatriating into their home currencies is driving down the dollar, I believe. So why are they so reluctant to buy treasuries at the moment?

Well, I think they are kind of expressing their views on that terrorist policy in a way. Their feeling is that, you know, if the U.S. wants to isolate, perhaps they're better off keeping that money at home.

And also, I mean, I suppose one shouldn't fail to mention the big, beautiful bill, as Donald Trump has called it, that's making its way through Congress at the moment. And a lot of people are saying that is going to vastly increase the U.S. debt and that that in and of itself might make people less reluctant to lend even more.

Yes, that certainly could put additional pressures on the bond market. In some ways, the higher yields might bring some of that money back and support the dollar. But in terms of U.S. long-term rates, I think the

The long run prospects there are not good that we're going to see those rates rising. And there's always, as always with these things, a downside and upside. I suppose if the dollar is weak at the moment, that doesn't hurt in terms of encouraging people to buy American things, even if there's a whole issue, of course, to do with mutual tariffs.

Yes, it does provide some support there for sure. But as many of the earlier guests have pointed out, we do have a very interconnected world economy and it's difficult to change those buying patterns, develop the domestic manufacturing capability. All of that takes time. So in the short run, there's going to be dislocation.

Let's talk then, Peter, about something else in one of the big stories really in the tech world at the moment, which is about Apple and its Siri assistant that people use, of course, on their machines very often. And Apple now considering open AI or Anthropic as alternative AI sources to power Siri. How are people reading this?

Well, the market reaction today was positive. Apple stock was up about 2%. It was actually down before that news broke. I think people do view Apple as being somewhat behind many competitors in the AI space, perhaps because they've been trying to do it alone. And by reaching out to some of these leading well-known firms,

They're showing an openness and an understanding of that problem and looking at alternative solutions to help them catch up with others in the space. But it's strange that a company like Apple that has historically gone its own way can't come up with something which some of the other big players in the field are doing themselves. It seems a strange thing for Apple to do.

Well, they've certainly relied on outside partners for many things. You know, over the years with their modem chips, they've relied heavily on Qualcomm. They tried to go their own way in developing their own modem chips, and they found that internally they couldn't do it. So they had to go back to Qualcomm. Well, we'll see how it works out and which one they go for, if indeed they go for either of them. Peter, thanks so much for being with us. Peter Jankowskis there of Arbor Financial Services in Chicago.

Now, cassava. It's one of the world's most versatile crops. It's a lifeline for food security in many places. But global demand for cassava is rising fast. Nigeria grows more of this root vegetable than any other country in the world. So why isn't then Nigeria cashing in on its cassava? Well, Laura Hayton-Gins has been finding out.

This is Peckham, south-east London, also known as Little Lagos for its big British-Nigerian community. I'm heading to Bim's African Food Store, a local institution.

This one, this one, and you eat with chicken. Five, six, seven different cassava products. Besides the edible root, which is kind of like an elongated potato, cassava can be processed into a wide range of products, including starch, flour, a coarse grain called gari, and a dough called fufu, as well as ethanol and even glue. Thank you so much. Lovely to meet you. OK, bye.

Cassava's importance to diets around the world is not to be underestimated. Professor Lateef Sani is a world-leading expert on the crop. In sub-Saharan Africa developing countries, a lot of people eat cassava. If you took cassava away, how would it affect the world's population? I must tell you, if you take cassava away, it's like a third world war.

World War III. In terms of survival, it's going to be tough. Defending against this kind of devastation is Nigeria's army of smallholder farmers who number in the millions and who do their work manually.

Mrs Kemi uses a machete on her cassava farm in Ogun State, southwestern Nigeria. We labour a lot. Even at times, we might not be able to complete the planting because of the stress and the hard labour. If we use machines, planting, agriculture will be very, very easy. But I don't have enough money to afford it because we cannot apply our whole capital on machines alone.

Most smallholder farmers are limited by a lack of access to machinery. And while Nigeria is the world's largest producer of cassava by far, the market is highly fragmented. The global cassava export industry is worth about $3.5 billion, but Nigeria accounts for only about $1 million of that.

Dr. Mustafa Bakano, head of the Nigeria Cassava Growers Association, wants to turn things around. We first need to know who are the farmers. By the time we are able to identify their farmlands, we are able to know what exactly is it they need and what exactly is the challenges. His plan is to organise all smallholder farmers into clusters.

through which they can access bank loans to buy processing machinery, which they can later pay off due to their increased yields. I think the future should be looking very, very prosperous if I am allowed to implement this new framework. I'm looking at up to 10 years to have a sufficiency in terms of the processing plants across the country. Some clusters have already been set up, but aggregating millions of farmers is a gargantuan task.

Professor Lateef Sani is optimistic it can be done. Cassava is an engine of growth. And if everybody works together, farmers, processors, marketers, are assured that they will have opportunity of making more money from cassava and enhancing their livelihood. The potential of cassava isn't in dispute. If successfully harnessed, it could transform the Nigerian economy.

Laura Hayton-Gins there reporting on cassava. Now, when is a sandal not just leather footwear? When it has a pattern that's pretty much identical to the traditional Kulhapuri sandals made in the Indian states of Maharashtra and Karnataka, but is nonetheless presented as the latest line from a major Italian fashion house.

Well, the sandals I'm talking about were shown off by Prada at the Milan Fashion Week last week, without mentioning the Indian origins. The Maharashtra Chamber of Commerce, Industry and Agriculture wrote to Prada saying the design was commercialised without crediting the artisans who've preserved its heritage for generations.

Well, now Prada's got in touch with them and it said, we are committed to responsible design practices, fostering cultural engagement and opening a dialogue for a meaningful exchange with the local Indian artisan communities, as we have done in the past in other collections, to ensure the rightful recognition of their craftsmanship.

Well, let's talk about all this to Pauline Brown, the former chair of LVMH North America, who joins us now. Pauline, thanks for being with us. Thank you. First of all, we should say that, you know, clearly Prada are, I guess, attempting to rebuild their reputation or at least what has come out of this. But it is a bit surprising or perhaps it isn't surprising that a company like that will take something that,

clearly seems to be a design by artisans in India and claim it as its own. Not surprising at all. I can find examples going all the way back to the 1960s where one of the early Christian Dior collections used motifs from saris in its collection without attribution and similar to this case, you know, you simply said it was inspired by a certain cultural tradition.

I think the real challenge here is number one, um, that they, that Prada did say it is inspired instead of saying as it was purely source, because there was absolutely no variation on those sandals from what you can buy on the street in this one section of India. And secondly, uh, that, um, uh,

that the Indian economy is becoming very important in luxury fashion, and therefore the consumers have a voice. And I think cultural, political, economic pride is much more fierce today from that part of the world than it would have been, say, in the 1960s. Yeah, and I mean, it comes under the title, which can be misused, I suppose, but it is perhaps significant, of cultural appropriation.

People saying, hang on, you can't just go around gathering things that are made traditionally and then making money out of them without, I suppose, paying your due to the artisans. Yeah. Well, and look, fast

Fashion is always appropriating from, if not other cultures, then other designers, other parts of history. It's an industry that's built on inspiration as opposed to innovation. That is, to me, less the problem than the market economic inequities that happen. So this particular sandal would retail in districts in the Calipari area for, say, $20 max.

Now, if this comes to market and Prada was pre-showing its collection, it doesn't retail the sandals just yet. But if it did, I guarantee you that they wouldn't sell them for less than $600. And they would not necessarily be paying a license or any sort of markup for those original makers. So I think the outrage is really about the economic inequity.

And I mean, would you say it is unethical to do that? I mean, you're from the fashion industry yourself. You definitely think that is right. I would. I would. I would. Normally, what I would expect to see on a runway is just what was originally admitted to that. You take inspiration from different designs. They could be from other cultures. They could be from other designers. But then you put a twist on it.

Right. Then you do something that makes it markedly Prada. And in this case, there was no twist. Inspiration, not appropriation, I suppose, is what we're talking about. Well said. Pauline, thank you so much for being with us there. Pauline Brown, the former chair of LVMH North America, talking to us here on World Business Report.

Over the past 25 years, technology has transformed our world in amazing ways. We've gone from dial-up modems to 5G connectivity and bulky PC towers to AI-powered microchips. Every day, innovators are redefining what's possible. Through it all, Invesco QQQ ETF has connected investors to the forefront of innovation. Access the future today with Invesco QQQ. Let's rethink possibility.

There are risks when investing in ETFs, including possible loss of money. ETFs risks are similar to those of stocks. Investments in the tech sector are subject to greater risk and more volatility than more diversified investments. Before investing, consider the fund's investment objectives, risks, charges, and expenses. Visit Invesco.com for a prospectus containing this information. Read it carefully before investing. Invesco Distributors, Inc.