Supply Chain Crisis Likely to Endure into 2022

After governments across the planet systematically brought their economies and industrial bases to a virtual halt (beyond essential products) in 2020, 2021 has been largely defined by supply chain crunches that have left many shelves across America understocked or completely barren.

But after a year of trying to “get back to normal,” will things be any better in 2022, or will the crisis continue to grow?

Some experts believe the bottlenecks created by government-imposed reduction in “supply & demand” will take time to sort out now that people are simply going back to living their daily lives.

Tim Uy of Moody’s Analytics told CNBC that in his view:

Supply will likely play catch up for some time, particularly as there are bottlenecks in every link of the supply chain—labor certainly, as mentioned above, but also containers, shipping, ports, trucks, railroads, air and warehouses.

From an economic standpoint, one of America’s greatest vulnerabilities has been exposed: offshored supply chains of everything from consumer goods to critical technologies like semiconductor chips.

And Tim Uy is not alone in his estimation that the challenge will persist into the next year.

Nata Dvir, chief merchandising officer, Macy’s recently stated:

We expect supply chain challenges to persist throughout the first half of 2022. Our team has done a great job leveraging our strong networks and relationships with international carriers and brands, and diversifying how we move product both up and downstream. I know they will continue to be flexible, agile and creative throughout 2022 to find new ways to mitigate any potential disruptions

Apart from the pure logistics of activating supply lines from a virtual standstill, is the issue of inflation. This has made everything more expensive from top to bottom, and has helped exacerbate the supply side issues currently being experienced.

Entrepreneur.Com notes:

The second wave, more recent, has brought the problems of inflation, increased costs of goods and materials, talent shortages, and industry-wide disorientation. Many experts have lent a voice to the general prospect that hopes should be kept in check, and that the kinks incurred to the supply chain might not be fully resolved until 2023.

Ultimately the chaos currently being worked through in the global supply chains will not simply disappear. As long as the specter of Covid-19 and its variants continue to haunt government policies, an abrupt disruption can emerge at any given moment. Inflation, advertised as transitory by the Federal Reserve and other experts at the beginning of the year, will not likely resolve without intervention, such as rate hikes or Fed “tapering” to reduce the amount of liquidity that has been shot into markets since Covid took hold.

Above all, the move to begin sourcing more locally will likely play a big role in when supply chains are back on track, and ultimately, more resilient from the setbacks experienced over the last two years.

Image Credit: Photo by Andy Li on Unsplash

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

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