Intelligence media article: Global supply chain crisis may extend into next year


The website of Chilean economy of the Americas published an article on February 11 titled “Global Damaged Supply Chain Recovery will be a Difficult process, Which may last until 2023″.While there are early signs that supply problems may be receding, trade channels have become so clogged that it may be next year before the worst-affected sectors return to normal operations.There are growing signs that the global supply chain crisis may start to ease by the end of the year.The crisis has upended central banks’ inflation expectations, slowed economic recovery and squeezed corporate profits.Yet trade channels have become so clogged that it may take until next year for the hardest-hit industries to fully return to normal, even assuming the new turn of the coronavirus does no new damage.”We expect that in the second half of the year we will start to see a gradual easing of shortages, bottlenecks and supply chain mislocations,” Kellogg chief Executive Steve Cahilian told Reuters.However, he added: “I don’t think there will be a return to a normal operating environment until 2024 because the dislocation is so severe.”Never before has the world trading system faced a crisis like the Novel Coronavirus.Starting in 2020, many companies responded to the downturn by cancelling production plans for the following year, only to be surprised to see a big rebound in demand triggered by rapid vaccinations in rich countries and financial support for household spending.On February 11, Chilean “Economy of the Americas” website published an article entitled “Global damaged supply chain recovery will be a difficult process, which may last until 2023″.While there are early signs that supply problems may be receding, trade channels have become so clogged that it may be next year before the worst-affected sectors return to normal operations.There are growing signs that the global supply chain crisis may start to ease by the end of the year.The crisis has upended central banks’ inflation expectations, slowed economic recovery and squeezed corporate profits.Yet trade channels have become so clogged that it may take until next year for the hardest-hit industries to fully return to normal, even assuming the new turn of the coronavirus does no new damage.”We expect that in the second half of the year we will start to see a gradual easing of shortages, bottlenecks and supply chain mislocations,” Kellogg chief Executive Steve Cahilian told Reuters.However, he added: “I don’t think there will be a return to a normal operating environment until 2024 because the dislocation is so severe.”Never before has the world trading system faced a crisis like the Novel Coronavirus.Starting in 2020, many companies responded to the downturn by cancelling production plans for the following year, only to be surprised to see a big rebound in demand triggered by rapid vaccinations in rich countries and financial support for household spending.”Although supply chain constraints continue to weigh on growth, there are signs that the issue has peaked and this is one factor contributing to a slight moderation in consumer price inflation,” said Acme.At the same time, containment measures and frequent infections have led to labor shortages and factory shutdowns at a time when consumer spending is shifting from services to goods.Philippe Leyen, chief economist of the European Central Bank, compared the aftermath to that of The Second World War.After World War II, demand soared and companies had to quickly switch from military supplies to civilian goods.Recovery in export economies such as Germany has been hampered by supply bottlenecks in their factories, while higher transport costs have combined with higher fuel prices to push US inflation to a 40-year high.Now, with the less aggressive omicron variant of the Novel Coronavirus prompting authorities to relax restrictions, there are early signs that the supply problem may be receding.An earlier survey by the INSTITUTE for Supply Management showed us Labour supply and supplier deliveries rose for the third month in a row.Meanwhile, purchasing managers’ indices in Europe also reflect easing pressures.While this has boosted central banks’ expectations that inflationary pressures will fall markedly by the end of the year, they are also aware that data from the real economy remain mixed.Sulin Ske, chief executive of Danish shipping giant Maersk, said recently that he expected more people to return to work at the ports, more newly built cargo ships to operate and consumer demand to start driving shipping services again.”At some point this year, we’ll see a more normal situation,” Schke predicted.Hapag-lloyd, the German shipping company, also noted that delivery bottlenecks and rising freight rates had eased, and that the biggest unknown for the industry was how long it would take to return to more reliable delivery times.The current bottleneck is unprecedented, but past experience suggests it will take eight to nine months for ports and inland transport networks to recover, according to Danish shipping consultancy Maritime Intelligence.”That said, there is no indication in the market that we are moving towards a resolution of the problem,” said Alan Murphy, the agency’s chief executive, in an analysis of current trends.He compared the situation with past data on average shipping delays.Any solution depends on whether there are further blows to the already badly affected supply chain.That vulnerability was highlighted on Monday when Strandis, the parent company of Toyota, General Motors, Ford and Chrysler, said production at their North American plants had been hit by parts shortages caused by protests by Canadian truck drivers over containment measures.Source: reference news website submission/suggestion: geyan@ccpit.org

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