Fragmented networks. Rising trade barriers, tariffs and localization mandates have deepened economic fragmentation. Long, linear supply chains optimized for efficiency are evolving into digitally enabled ecosystems. Nearshoring, dual sourcing and AI-driven forecasting are standard practice, while geopolitics and industrial policy are now structural design variables requiring compliance agility, scenario modelling and policy foresight. Geopolitical instability. Persistent conflicts, from Ukraine, to the Middle East, to East Asia, alongside the reordering of historic alliances, are ushering in a period of deeper volatility. Globalization is splintering into semi-autonomous trade blocs, anchored by the US, China, the EU and emerging “swing states.” For supply chain leaders, competitive advantage now lies in optionality – the ability to pivot production, sourcing and logistics seamlessly across multiple competing systems. Technological acceleration. AI, quantum computing and automation are accelerating productivity gaps between nations and sectors, concentrating value in a few digital powerhouses while exposing others to new dependencies in compute, data and energy. Kearney research shows that early adopters of AI in supply chains are already achieving up to 15% logistics cost reductions, 25% shorter lead times, 35% lower inventory levels and 15% procurement spend reductions. Learning speed has replaced scale as the ultimate differentiator, widening the divergence. Trust as the new currency. Rising public scepticism and geopolitical rivalry are forcing companies to operate under heightened scrutiny and national alignment. Transparency, data sharing and corporate accountability have become strategic assets, making credibility across partners and ecosystems as valuable as efficiency. Each of these forces on their own is disruptive; together they are systemic and rewriting the operating conditions for supply chains. The result is an environment where uncertainty is structural, not cyclical. To navigate this complexity, the World Economic Forum and Kearney explored a spectrum of plausible outlooks that could emerge and will often coexist, over the next three to five years. These overlapping realities are already shaping decisions across industries and geographies. They present an outlook for global value chains that will be more transactional, more volatile, more fragmented and, in some cases, more degraded than anything global leaders have experienced in the past four decades. Each represents a different equilibrium of risk, opportunity and operating conditions (Figure 1).2 3 45 How geopolitics and economics are shaping the global environment for supply chains FIGURE 1 Transactional outlook Bilateral deals r eplace multilateralism as a transaction-driven global or der takes r oot. Supply chains balance collaboration with contr ol, navigating contested access to energy , technology and critical inputs.Fragmented outlook Globalization is r eplaced by r egional blocs with divergent rules, standar ds and alliances. Companies localize, duplicate and diversify networks to preserve market access and resilience. Degraded outlook Sever e geopolitical fractur e triggers production localization, r estricted trade ﬂows and chr onic shortages. Efﬁciency gives way to security as supply assurance becomes the deﬁning priority .Volatile outlook Growth persists but r emains uneven. Frequent ﬁnancial, policy and climate shocks for ce constant recalibration. Leading ﬁrms succeed through optionality and r eal-time responsiveness.Transactional outlook Volatile outlookFragmented outlook Degraded outlook Intensifying Geopolitical fragmentationModeratingVolatile Global economic divergenceManaged Global Value Chains Outlook 2026: Orchestrating Corporate and National Agility 7