What Asia’s executives can do when a global shock scrambles supply and demand signals

• The Strait of Hormuz is the latest global shock facing Asia’s CEOs and executives. But, as the oil looks set to flow again, it is important to remember its lessons run wider than one waterway.

A logistics executive set the tone.

We live in a world that’s constantly volatile. The Strait of Hormuz is just one situation of many — the elephant in the room is that we could be in a super El Niño year. What surprises me is how little we still react. We forget very quickly that there was a blip, until suddenly there’s a problem again. We cannot let complacency set in. We have to stay energised and agile. (Logistics)

Reading between the lines: Now that crises have become more common, a pattern has emerged. Early demand and supply signals tend to be predictably misleading.

• Often, the actions companies take to protect themselves mask and later amplify a broader downturn.

Taking our cue from what senior executives in Singapore said about the Strait of Hormuz crisis, we extrapolated key lessons for next time.

• When the data on your desk is confusing, these could be the reasons why.

1. The all-clear is the first false signal

In Q2, the numbers came in better than the forecasts. Several executives looked for the negative impact of the crisis but couldn’t find it.

This morning, my COO and I were saying: everyone’s talking about this, but we can’t see it. Where is it? It’ll hit at some point — typically, it starts with the purchasing power of middle-class people or factory workers. Once it hits them, it hits us. (Industrial)

All the forecasts we did at the very beginning were way too pessimistic. Even the status quo scenario — which is what’s actually happening — was too pessimistic. So are we the only industry where the actual numbers are surprisingly good? (Hospitality)

2. Scarcity distorts the orderbook – in both directions

In industry, threats of scarcity and actual scarcity can scramble signals two ways – either with stockpiling or destocking. Fear of being caught short pulls buying forward and fills warehouses. This inflates prices.

Then buyers with inventory vanish, running down the stock they hoarded instead of ordering more, so they can sell their goods at crisis prices.

• Neither move reflects real demand — one inflates it, the other hides it.

A lot of the buying was because everyone wants to be sure they’re not the one left without raw material. There was a strong pull-forward. Or people said, ‘I’ve got reserves, let’s just use them and worry about it later’. They ran down the reserves much faster than we anticipated. We thought they had 30 or 60 days. Their attitude was ‘let’s make money while the sun is shining’. (Industrial research)

The macro picture misled, too.

• The supply signals from China became scrambled when talk of export bans got falsely conflated with China stopping exports overall.

We thought China had put in export bans. When in fact, they’re exporting to the world. Production wasn’t that impacted — they were running at full capacity. (Industrial research)

3. Factories stay open, but this obscures crippling shortages

The largest factories rarely stop completely. A shutdown costs too much, so operators keep the lights on at minimum load by stretching out their inputs for as long as possible – making the business look healthier than it is.

We’re not going full blast. We stretch it out because shutting down a big plant takes months to restart. So, you run it at 20–25% capacity, just to keep it open. Shutting down would be so expensive that you avoid it. (Chemicals)

4. Force majeure becomes a strategy

Not every ‘we can’t supply you’ is about scarcity. Asia CEOs say much of it is strategic repositioning: firms are protecting margins or picking the customers who will matter most in the future.

Now we really have to think about whom we sell to. We’re selling strategically. If someone has massive potential — a new industry, a new technology — you tell them you want to partner, and they get the allocation others won’t. (Chemicals)

When supply is tight, the supplier holds the power and seeks to use it.

Suppliers are in a nice position — they supply whoever offers the highest price. And now they can pick and choose. (Consumer goods)

Buyers also use crises to their advantage.

They don’t want to buy higher-cost feedstock just to fulfil contracts. They announced force majeure because they want to protect their own profits. It’s a perfect excuse. (Industrial research)

5. Consumers don’t flinch, but it’s just a matter of time

Many households are still spending. But that comfort could be on borrowed time. The pain travels from industry to jobs to wallets, and it travels slowly.

There’s a B2B impact going on, but the B2C impact isn’t evident yet. Everybody’s sitting on reserves — some say six weeks, some say six months, depending on the market. Eventually, what matters is the cost of living. (Financial)

The holidays are locked in — the last thing a consumer delays is leisure. But corporate travel will hit us, as companies freeze travel and hiring. There’s a time lag. (Hospitality)

The slow-burn risk is food – until crops are harvested, the extent of food shortages are hard to assess.

A big impact comes next year on food inflation. Fertiliser supplies are very low, and we can miss the planting window. Food inflation hits the consumer more than anything — it’s your daily purchase. (Chemicals)

6. The forecast itself stops working

Models are based on past or predictable behaviour. But in a multi-faceted global crisis, the usual signals multiply and get crossed. So, the tools that should cut through the noise are adding to it.

Crude depends on the shipping analysis — when Hormuz reopens, how long to clear the backlog. By the time it reaches chemicals and plastics, it’s another hundred forecasts. The permutations go crazy. (Chemicals)

It used to be easy — we’d give the client a base case. But the base case never happens. So what’s the purpose of a base case? Now they want scenarios: is Hormuz opening in June, July, August, September? (Industrial research)

If everyone had bought their usual pattern, it would’ve been all right-ish. But the rush came, and they filled their warehouses. Now, when will they buy again? A month? Two? Three? That’s where our models stop working. (Chemicals)

Multiple changing dynamics are very hard to capture. That’s why forecasting is a headache for revenue management. Revenue managers receive probably the highest salaries in our industry, because their modelling and forecasting to adjust prices and optimise them, is so vital. (Hospitality)

The bottom line: the hit will come as buffers thin

Reserves, stockpiles, and government cushions are not protection. They mask a delay.

• When they run out, the signal and the pain arrive together.

The hit is coming as reserves and stocks thin out. There’s a patch where Asia struggles more because we’re facing a physical shortage. By the end of this month, if it’s still like this, maybe some of those pessimistic scenarios won’t be so wrong. (Industrial)

✅ The checklist: in a crisis, before you trust the rosy data, ask these 8 questions

1. Question the calm.Where are this quarter’s good numbers actually coming from? Separate organic demand from inventory, subsidy and one-off strength.
2. Strip out the pull-forward.How much of the recent order strength is front-running the supply chain (or panic buying) rather than consumption? When it stops, that gap is your demand air pocket.
3. Check the survival time; open factories ≠ all good.Which critical suppliers are operating at minimum load to avoid a costly shutdown, and how many weeks of feedstock do they have on hand?
4. Know your place in the queue.When allocation tightens, are you a strategic account your suppliers protect, or the first they cut? Ask now, not later.
5. Read force majeure twice.Is it real scarcity, or a chance for the supplier to reprice and reprioritise? Reset your contract terms on that basis.
6. Watch the lag, not the mood.Track the chain from factory hours to hiring freezes to food and energy inflation. Consumer pain is the last domino to fall, not the first.
7. Retire the base case.Replace it with scenario ranges, re-forecast on a faster clock, and name the trigger dates — a reopening, a reserve running dry — that would force you to change plans.
8. Track and map the buffers, yours and theirs. How deep are your reserves, your suppliers’, your key markets’? Mark the point where they all thin at once. That’s when the signal and the pain arrive together.

Thank you for your time.

The IMA Asia Bulletin is a curated mix of brief, timely insights from our forums or monthly catch-ups with IMA members. Our sessions are convened under the Chatham House Rule, and quotes are edited for brevity and clarity.

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