“Seriously, when is my stuff gonna get here?”
That’s a phrase repeated far too often the past 18 months due to domestic and international shipping delays.
Is 2022 going to get any better?
First, we must understand that a continued global economic recovery is important for all shipping segments to maintain their favorable supply-demand balances into 2022. Key downside risks include a slower-than-forecast economic recovery or a resurgence of Covid-19 cases, leading to a collapse in demand, which we are now unfortunately seeing with the Omicron variant. Pandemic-related restrictions have also led to continued supply-chain issues.
So, that means, for now, that supply chain issues may take a few more months to improve versus what was expected and forecast prior to the Omicron variant taking hold in late 2021.
According to CNBC.com, global supply chain disruptions may continue until the second half of 2022, citing trade credit insurer Euler Hermes from a recent report.
“Euler Hermes cited renewed virus outbreaks, China’s zero-Covid policy and expected trade volatility during the Lunar New Year. Measures to contain Covid-19 can affect manufacturing and shipping operations, exacerbating the supply chain crisis. Analysts have previously warned that the new variant, Omicron, could deal another blow to supply chains. Production shortfalls are behind 75 percent of the current contraction in global trade volume, while logistic bottlenecks are the cause of the remaining 25 percent, Euler Hermes economists wrote. But this supply chain chaos is likely to ease in the second half of 2022 for three reasons, the authors of the report added: Consumer demand has peaked; inventories are back to pre-Covid levels; and increased shipping capacity.”
What’s all this mean to you?
For the near and long term, continue to plan as if there will be ongoing supply-chain issues…until there isn’t. The worst thing you can do is say, “Well, I’ll wait until next month when things are better.” As we have all learned the past two years, no one knows for sure when things will be back to normal.