Global supply chain pressure eases
After 18 months of upheaval due to pandemics, conflicts, and congestion of the Suez Canal, global logistics has shown signs of recovery, reducing supply chain pressure.
According to data from international freight company Freightos, the average cost of shipping a standard 40-foot metal box around the world is down about 45% from the peak recorded last fall. The number of ships waiting to enter the port of Los Angeles (USA) also decreased by 75% compared to the beginning of the year. The first six months of 2022 are also the busiest and busiest times for this port in a century.
Air freight times are also said to be improving by the Flexport supply chain. The Federal Reserve Bank of New York’s global supply chain stress index is down 57% in July from when the index peaked.
According to S&P Global’s latest monthly survey of purchasing managers, businesses from major economies have confirmed that the delivery time of inputs and materials in July has eased. Surveys conducted by the European Commission also show that shortages of raw materials and equipment are no longer a production constraint for manufacturers based in the continent.
Joanna Konings, the senior economist at ING Bank, said supply chain pressures can be so severe that it forces businesses to stop production. Product shortages mean prices skyrocket. “Currently, goods have returned to circulation. The international trading system also recovered dynamism and showed positive signs of recovery,” Konings said.
Recently, according to a Philadelphia survey, more than 40% of participating US manufacturers expect an improvement in delivery times in the next 6 months. Experts say that the current logistics and supply chain market that is stable amid political turmoil can be a good thing for the world economy. However, this trend reflects declining demand for goods due to high inflation. The increase in transportation and material costs in 2021 also contributed to a significant decrease in purchasing power.
However, during the peak shopping season at the end of the year, logistics and supply chains may again face the risk of congestion. Josh Brazil, Vice President of Project44, a data platform, said that shipping providers may not have enough capacity to handle it if the volume of goods suddenly increases again. “The state of delay will most likely return in the last months of the year if there is no preparation,” the vice president said.
According to Financial Times
