The State of the Global Supply Chain Crisis
The global supply chain crisis is on everyone’s mind. Back in July 2021, CNN reported that supply chains were discussed on nearly two-thirds of company earnings calls. Thereafter, drastic measures to relieve congestions, such as the Biden Administration announcing around-the-clock operations at the Port of Los Angeles, were introduced. Have these measures borne fruit?
Eastern Europe becomes a front in the global supply chain crisis
If anything, recent events have superseded whatever limited gains those original measures delivered.
War in Ukraine, for one, is affecting energy and agriculture commodities.
Europe is heavily reliant on Russian crude oil and natural gas. And though its major economies haven’t imposed sanctions on Russian energy imports, their consumers have still been badly impacted by sharp price increases. Crude oil, in the immediate wake of the Russian invasion, spiked above $100/barrel, settling in at prices not seen in half a generation.
Food reserves, if anything, are more precarious. As Deloitte reports, Russia and Ukraine account for more than a quarter of the world’s trade in wheat and for more than 60 per cent of global sunflower oil and 30 per cent of global barley exports.
Factory shutdowns in China exacerbate global supply chain crisis
Finished products are also in short supply – and getting shorter still. China, having long pursued a zero-COVID policy, is being hammered by a wave of infections.
Hubs like Shanghai have recently been shut down. And lockdowns in Shenzen have closed the factories of major manufacturers like Apple.
Supply chain ripples around the world
Advanced economies are also being hit. In Australia, businesses have been confronting unprecedented availability challenges from staffing shortages.
Big chains like Coles were putting limits on staples like meat and poultry to guard against running out.
Food isn’t the only thing in short supply.
Ship shortages have crippled the supply chain for imported cars. The global computer chip shortage has led to long delays for electronics.
Timber, ammunition, bikes, even pianos are in short supply. The items that are available are going for inflated prices, as many economies experience severe price spikes.
Further dismaying for consumers is the fact that experts expect inflation to persist.
David Leaney, a lecturer for international supply chain management at ANU’s College of Business and Economics, cautioned that things would “get worse before they get better”.
If anything, retail expert, Roger Simpson sounds a more pessimistic note, predicting that the global supply chain crisis might not ease until 2023.
In Australia, again, political leaders have begun to act in advance of the election. In January of this year, the National Cabinet lifted certain virus restrictions on transport and freight workers.
Of course, long-term effectiveness remains to be seen.
Finally, businesses do have solutions, even if their supply chains feature multiple points of failure. For instance, committing to visibility-promoting strategies, such as scenario planning, can help reduce the risk of disruption.
What other measures can help improve resilience amid the global supply chain crisis? Download our guide to addressing the supply chain crisis for more.