Temperature Check for the Supply Chain
In our ever-changing economy we feel it is necessary to keep current on the happenings in the global market as it directly affects us all. Let’s get our feet wet with an overview of what today’s supply chain looks like and what tomorrow might bring.
The growing list of factors It never seems to stop.As it always has, global crises continue to create ripple effects through out economies worldwide. Here in the U.S. that means more delays, more shortages, more inflation... you get the picture. Unless you have been living under a rock you can likely guess what continues to inflame supply chain woes.
Lock downs are back in full force across in the sea in China and other parts of Asia. We have all seen the impacts before of what lock downs over there mean for us. As a majority of companies in the U.S. rely on materials and products made in China, this slows down manufacturing and procurement for a lot of businesses. “The supply chain globally across our industry is still not stable. It will take us a little bit of time to get to that point. And the reason why I say this is that we have to understand the root causes that got us to where we are in the industry. And we have to look back at how much dependence there was on a supply chain that was based in Asia and in China in particular and the fact that the supply chain is decoupling from Asia and from China. That obviously takes time.” -Tarek Robbiati, CFO of HPE in an interview with finance.yahoo.com
The Russian invasion in Ukraine has also taken its turn on the punching bag that is the supply chain. Ukraine being a main provider for neon gas, which in required for creating semiconductors, as well as a resource for textiles and car parts, has now become nearly obsolete in the market. This comes along with sanctions placed on Russia in almost every industry, it has created a cluster of headaches for companies across the globe. One small, but significant factor has been unemployment. The pandemic brought about the great resignation and manual labor workers are harder to come by, those in the transportation sector included. Industries all over the U.S. feel the squeeze as warehouses, restaurants, plants, even sales industries are struggling to find people to fill the roles needed in order to operate at full capacity. Many workers have decided to switch industries and some even refusing to work at all. With less people in the workforce, the less production we have.
Where are we today in comparison to...
According to resources, businesses for the most part are feeling optimistic about the future but are aware that any signs of stabilization are to be taken with a grain of salt. We will likely not be seeing any sort of substantial leveling out until mid-2023 some sources say. In comparison to this time last year, we have seen a slight slow down in economic growth,but we are still ahead of peak-covid-times of 2020.This slowdown is attributed to the supply chain itself as well as the other factors listed above. Demand remains high for goods and commodities,but it seems inflation has done little in the way of deterring it.
While companies like HPE (mentioned above) are seeing a 20% increase in revenue quarterly, their bottom line is not seeing much of that profit due to supply chain back ups and delays. For those experiencing the same or worse conditions they have had to find resources and materials from elsewhere or, worst case scenario, make the product unavailable entirely. Though this type of shift was first seen towards the end of 2020 while manufacturers from almost industry needed to find alternates for material or repurpose what was at their disposal, this practice is still very much present all over the country.
A silver lining may just be that businesses are now in the habit of constantly talking supply chain and making sure to make themselves somewhat bullet-proof to the ongoing barrage of international events. It seems almost all of us have had to adapt one way or another given the relentless disruptions that we experience. There is no true way to measure or predict what will happen next, some have even given up trying to forecast as they do not know what to expect next.
As we continue to pull through these constant historical, major events there has come about innovations and inventions from those hit the hardest. This type of resiliency has always been a trademark of the human race. With today’s technology and advancements on the horizon we will likely be changing how businesses are operated and managed to accommodate for whatever the future holds.
If you are a company struggling to find reliable freight solutions in these hectic times, give us a call to see what Meadow Lark is able to do for your business. (866) 736-7233