How economic uncertainty is transforming supply chains

Economic uncertainty has become a permanent fixture of the retail landscape and a massive challenge for supply chain leaders. The numbers tell the story: Food prices have surged 31% since 2019. Energy costs climbed 3.3% in just the past year. 

And shipping costs? They've gone completely wild. Container rates that clocked in at $1,342 for a 40-foot container in October 2023 skyrocketed to more than $5,900 by July 2024 on the global composite index, which tracks freight rates across eight major shipping routes including Shanghai to Rotterdam, Shanghai to Los Angeles, and Shanghai to New York. That's a staggering 340% increase in less than a year.

Rates have come back down since those 2024 peaks but are still more than twice the prices seen in 2023. As of March 2025, global rates averaged $2,264 per 40-foot container, compared to the pre-pandemic average of $1,420 in 2019.

Add shifting tariff policies that are causing headaches to keep track of and anxious consumer sentiments to the mix, and you've got a perfect storm of volatility.

But here's the thing: The most successful retailers aren't just trying to survive this uncertainty; they're using it as a competitive advantage.
 

Economic ripple effects hit every link in the chain

Economic pressures like the ones we’re experiencing now create a domino effect that touches every aspect of supply chain operations.

Consumer behavior goes sideways

Shoppers are drastically changing their purchasing patterns. Recent data shows consumers are spending 10% of their clothing budgets on secondhand platforms like Poshmark and ThredUp, while trading down from premium to value brands across the board. These rapid changes are leaving retailers with the wrong inventory in the wrong places.

The cost squeeze

Rising costs at every stage—raw materials, manufacturing, transportation, labor—are squeezing margins while consumers become increasingly price-sensitive. Retailers face an impossible choice: Absorb costs and hurt profitability, or pass them along and risk losing customers.

Forecasting becomes a guessing game

When consumer preferences shift dramatically within weeks, annual planning cycles become obsolete. And traditional forecasting models built on historical patterns struggle when those patterns become useless at predicting future behavior. 

Supplier vulnerabilities multiply 

Economic pressures extend beyond retailers to their suppliers and manufacturers, creating cascading risks of disruption, financial instability and production challenges.

The painful reality for traditional supply chains

These challenges are hitting companies with traditional, siloed supply chain operations particularly hard. When departments operate from different data sources and systems that don't talk to each other, the organization's ability to respond cohesively to rapid changes is severely compromised.

Traditional retailers find themselves constantly reactive—adjusting to changes after they've already impacted operations. Their planning teams work in isolation from inventory management, pricing teams make decisions without visibility into supply constraints and nobody has a complete picture of what's actually happening across the business.

The result? Stockouts of trending products while slow-movers pile up in warehouses. Price adjustments that come weeks too late. Manual coordination efforts that eat up valuable time while competitors move faster. In an environment where consumer preferences can shift dramatically within days, these delays become devastating.

But while some retailers struggle with these mounting pressures, others are taking a completely different approach.