Supply Chain Challenges to Linger for the Foreseeable Future, Says New Report
What little optimism industries had for an easing of supply chain challenges moving into 2022 has largely shattered not even six months in. Skyrocketing inflation, historic gas prices, labor shortages, and continued supply chain struggles for electronic components, semiconductors, and other key specialized parts for vehicles, healthcare equipment, and other industries have only seemed to worsen with each passing month. And industry analyst projections are providing little reason to hope these challenges will ease any time soon.
The latest report comes from Citi, which anticipates that supply chain pressures are now likely to become the new normal for the foreseeable future.
“Bottom line, we find that supply chain pressures have proved to be more persistent, and apparently deep rooted, than we had expected even a few months ago,” strategists led by Global Chief Economist of Citi Research Nathan Sheets wrote in a comprehensive note. “And the Russia-Ukraine conflict seems to be further amplifying the stresses. Given these realities, any hopes of near-term improvement in supply chain conditions have been shattered. The challenges in the months ahead look to be as acute as at any time over the past two years.”
Key to breaking the grim spiral, according to Citi, is the state of the COVID-19 pandemic in the coming months which, although far from the deadly global event it was in 2021, is still present and, in fact, once again becoming more prominent. In the U.S., cases have rises to approximately 100,000 cases a day, and could be as much as five times that figure, The Hill reports. Additionally, hospitalizations have risen to around 27,000, although the numbers have deaths have remained relatively stable.
Arguably the hardest hit of the major industries remains the tech industry, which has seen supply chain challenges largely due to the strict “zero COVID-19” policies that remain in effect throughout China. “We are about halfway through [the chip shortage],” Intel CEO Pat Gelsinger at the World Economic Forum in Davos, Switzerland. “My expectation now is that it persists through 2024. And the big issue that we’ve additionally faced over the last six-to-nine months is equipment that goes into the [fabrication plants].”
Supply chains across the globe must continue to prepare not just to survive the short term, but in the long term to adapt to a risk-laden landscape that may very well, for all intents and purposes, become permanent.