Global supply chain crisis peaked in 2021 but recovery from pandemic won't happen overnight

Mon 17 Jan 2022
Posted by: William Barns-Graham
Trade News

supply chain crisis

The global supply chain crisis may have peaked despite ongoing concerns about the Omicron variant, new data suggests.

Last year saw companies hit by a perfect storm of pandemic-related pressures including factory shutdowns, bottlenecks, and border restrictions at a time of booming consumer demand.

“Not only did we have Covid disrupting production, but fiscal stimulus boosted demand and the Suez Canal closure caused months of disruption,” said Guy Foster, chief strategist at Brewin Dolphin, told the FT.

Greater resilience

However, an index by the Federal Reserve Bank of New York, that looks at 27 variables, puts the supply chain crisis peak at October last year.

Supply chains could prove more resilient this year, as inflation curbs consumer spending, companies adapt to Covid-safe production and inventories are replenished, Foster said.


However, supply chains won’t get back to pre-pandemic status overnight, experts have warned.

Business should prepare for further disruption in Asia due to Covid-19-related absenteeism, power cuts and container shortages.

“The impact of Covid-19 on the workforce can be particularly problematic in Asia, where there is less automation and more reliance on manual labour,” Claudio Knizek, global leader for advanced manufacturing and mobility at EY-Parthenon, told Supply Management.

Labour improvements

The Institute for Supply Management (ISM) has said an improvement in labour supply in the US could be on the cards, with its gauge for factory employment rising to an eight-month high.

However, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted to Reuters that “shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption”.