We’re over half way through 2022, what’s the current state of the global supply chain?
It’s been a whirlwind past few years, with many huge events occurring which have affected us globally. From the Covid-19 pandemic, worker and materials shortages, supply chain chaos and now rising inflation, what does the future hold? The supply chain has knowingly suffered drastically, with political changes affecting trade and many more factors contributing. So what is the current state?
According to the Los Angeles Times, we are starting to see positive change! The supply chain industry last year saw congestion of container ships on many coasts, which have continued through the beginning of this year. Whilst we are still seeing challenges, they are becoming less frequent and more normal as businesses are finding ways to work around the ongoing issues. Although we are seeing supply issues reduce, there are potential risks when it comes to inventories stock piling due to less consumer demand.
“Labor strikes, factory disruptions tied to COVID-19 outbreaks in China, Russia’s war in Ukraine and year-end holiday shipping pressures could tangle logistics networks all over again.” - LA times
What’s the situation in global logistics?
There is an agreement that businesses need to keep an eye on consumer demand for goods, as it could go one way or the other depending on the continuing inflations worldwide. However, we could also see a spike as post-pandemic more people are starting to take holidays and eat out. When it comes to supply chain logistics, Ocean freight rates are continuing to decline, during a time which is usually peak for global shipping.
A lot of the logistics recovery relies on China, as they are generally a center of the industry. However the past year they have been experiencing small covid-19 outbreaks, resulting in city wide lockdowns to take necessary precautions. This has contributed heavily to the delay in logistics, with little to nothing leaving the country until lockdowns have ended. Now, logistics seems to be ‘back to normal’ after the country released numbers Thursday showing June was the country’s second-best month for exports in at least three decades.
Ongoing issues in Europe surrounding Russia and Ukraine War
Whilst we are seeing some positive changes in the supply chain industry, Europe is still experiencing challenges. With sanctions disrupting trade, extended shipping and labor issues are prolonging the recovery with much of the region's efforts going into the current situation in Ukraine. Congestion is starting to build at Northern European ports expectedly and creeping along the U.S. east coast.
So what’s to expect for the rest of 2022?
Businesses are staying cautious, but optimistic as we’re heading into the latter of 2022. This time of year includes huge events such as back to schools, season changes and Christmas, which generally brings more consumerism. As well as this, huge events such as Black Friday which see discounts across the weekend always tend to perform well. Gene Seroka, executive director of L.A.’s port adds a word of caution to all: “Train congestion is building again, with more than 29,000 rail containers delayed on L.A.’s docks, stakeholders should take action now to avoid a nationwide logjam.”
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