What factors will be shaping the future of the global supply chain?
As companies continue to navigate the ongoing supply chain challenges, there is a mixture of feelings surrounding the near-future. Whilst we are very aware of the pandemic being a largely contributing factor as well as the great resignation, what factors will be shaping the future of the global supply chain?
Consumers are now understanding what goes on behind closed doors
Before 2020, the average person purchasing a product wouldn’t think twice about what goes into the nitty-gritty manufacturing, let alone the shipping. But since the pandemic, we are all learning more about getting products from the manufacturer right through to the consumer, as we experienced materials shortage and delays like never before which directly affected everybody. On top of this, businesses are still overcoming the effects of these challenges from 2020.
To a degree, every cloud has a silver lining. Whilst nobody expected the challenges to occur over the past 2 years, it has given more information to the end-consumer on what really goes on to provide the product. In turn, this has resulted with more understanding on shipping delays and businesses are all in it together, so to speak.
This year’s inventory could be next year’s over-supply
Managing inventory is a very tough task, especially when you have unexpected pandemics taking place. Over the past couple of years we have seen stock shortages to complete over-stock, in a bid to stay prepared for whatever comes through the door. “Early this summer, Walmart, Target, and others had huge discounts on clothing and home goods - because a lot of the materials they had ordered up to a year ago finally hit stores, overwhelming them with inventory.” - Fast Company
So what are we expecting going into 2023? The world is navigating towards a recession, which means consumers may be spending less and the demand will decrease. Therefore, there could be a repetition of extra-stock for many businesses. Although, huge corporations are campaigning to help this issue going into the holiday season, such as Amazon strongly encouraging users to shop early with their Prime Early Access Sale.
Unsurprisingly, climate change could pose additional issues
There are many huge political factors currently impacting the global supply chain such as the ongoing Ukraine and Russian conflict. Whilst this is a matter of global concern, additionally climate change affects us all. “Low levels in Germany’s waters are impacting economic activity. And in the U.S., the Mississippi River is seeing falling water levels, which has resulted in a log-jam of over 100 vessels.” - Fast Company
These most definitely can impact shipping logistics, posing delays and a further backlog of containers at ports.
It’s not all doom and gloom, as there are signs of improvements
According to ING, it is expected that there will be a rush of new vessels, which could make container rates and shipping costs decrease. There is optimism ahead for 2023, and the Logistics Managers’ Index for September stated “September’s future predictions hint at normalization and a return to business as usual over the next year.” Furthermore, reports are stating that port congestions are starting to ease.
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Source: Fast Company