Supply Chain Crisis Far From Over

The supply chain issues that have been plaguing businesses for the last year or two are finally starting to ease. Shipping rates have come back down and the big backup of ships at West Coast ports has subsided. However, this doesn’t mean the crisis is over. Airlines are still struggling with a pandemic-induced pilot shortage and delayed shipments of new planes. Trucking firms are still lacking drivers. The war in Ukraine and strong consumer demand are also driving inflation.

Chairman Jerome Powell of the Federal Reserve noted that goods-related inflation hasn’t come down as much as policymakers expected given how much supply-chain issues have been resolved. Minnesota-based companies have reported mixed results, with some still feeling the effects of the ongoing chip shortage, while others are seeing signs of stabilization. Target, which will report its quarterly results soon, has had to use promotions to move excess inventory out.

The global supply chain pressure index has been showing steady declines for several months now, and supply managers in nine central states including Minnesota said in an October survey that the speed of deliveries is back to pre-pandemic levels. However, labor shortages in logistics and distribution are still causing delays in online orders. The drought has also led to lower levels on the Mississippi River making barge traffic difficult, which is pushing up food prices. And a possible railroad workers’ strike in December could further disrupt the supply chain.

It’s clear that the supply chain crisis is far from over. Companies are still facing higher costs for raw materials and intermediate finished goods, and labor shortages are pushing up wages and prices. The public has become more aware of the disruptions that were amplified and more apparent during the pandemic, but supply chain issues have always been a challenge. It’s going to take a lot of intelligence, luck, and planning to get the supply chain back to normal.