Companies need to strengthen their supply chains to withstand a run of disruptions that, in the view of Toll Group executive chairman Thomas Knudsen, is unlikely to end soon. Speaking at the Fortune Southeast Asia 500 Summit in Ho Chi Minh City, Knudsen argued that businesses must pursue robustness rather than resilience alone, building in spare capacity and scrutinising their supply networks far more closely than many have done so far.
Knudsen pointed to a sequence of shocks since 2020, beginning with the COVID-19 pandemic and followed by Russia's invasion of Ukraine, the introduction of United States tariffs in 2025 and the end of the de minimis rule for low-value imports. The most recent disruption he cited is the war between the United States and Iran, which has led to the closure of the Strait of Hormuz, one of the world's most important shipping chokepoints. He described these events as a flock of black swans, meaning a cluster of rare and hard-to-predict incidents that arrive in quick succession.
Before 2020, Knudsen said, many companies typically reacted to a crisis when it hit and only then turned to banks and logistics providers for help. He argued that this approach is no longer adequate. Firms, he said, now need to examine their second, third and fourth-tier suppliers, the businesses that feed into their direct partners, because weaknesses further down the chain can halt production without warning.
Robustness, in his description, means keeping alternatives ready before they are needed. Knudsen gave the example of backup truck and rail routes, which give a business somewhere to turn when a primary corridor closes. He also proposed combining transport modes, such as sea-air routes, so that a disruption in one mode does not bring a whole network to a halt. He acknowledged, however, that the logic does not apply evenly. For low-value goods such as cement, he said, building resilience is often too expensive to justify.
Knudsen also addressed the response of Chinese manufacturers to US tariffs. According to his remarks, Chinese firms are diversifying into new markets and new logistics hubs rather than moving production back to their home country, and he considered a large-scale return of manufacturing to the United States unlikely. Toll Group, founded in 1888 and owned by Japan Post, runs freight forwarding and contract logistics across Asia, which gives Knudsen direct exposure to these shifts.
The concern is widespread among business leaders in the region. A Standard Chartered Future of Trade report, based on a survey of 2,100 leaders across 27 markets, found that the share of ASEAN executives naming geo-economic actions among their top three concerns rose from 49 per cent to 57 per cent. James Nesbitt of Standard Chartered said clients are making long-term commitments to the region, even as they manage short-term risk.
Knudsen used the ASEAN bloc to make a broader point about regional integration. The ASEAN Free Trade Area, established in 1992, has cut tariffs within the bloc, and its economies together amount to about $4.5 trillion, growing at roughly 4.5 per cent a year according to the International Monetary Fund. Yet only about 22 per cent of ASEAN trade takes place within the bloc, compared with roughly 60 per cent for intra-EU trade. Knudsen cited the European Union's single currency and open borders as a model, while noting that Brexit had shown how separation can create real friction.
On payments, Nesbitt proposed an overlay linking the national real-time payment networks that each ASEAN market currently operates on its own. Blockchain, tokenisation and stablecoins have been put forward as possible solutions, although, as the discussion noted, none of these has yet been proven at the scale required.