Supply chains had been experiencing challenges for years before the COVID-19 pandemic. Once the pandemic hit, supply chains faced countless more challenges that are still affecting markets across the globe. Shipping costs have been uncharacteristically high with delivery periods being unusually long. This has led to a lack and shortage of certain available resources. The effects have been so prominent that musician Jack White has named his 2022 tour the “The Supply Chain Issues World Tour”. As prices increase, political tensions intensify, and delivery delays get longer, it is clear that supply chains will experience a range of challenges in 2022.
Port congestion. Port congestion has been a challenge in recent years, as ships across the globe have had to wait in queues to get into ports, creating bottlenecks. According to Maersk, yard density at Bremerhaven was 131% and ships have to wait up to 10 days to berth at Felixstowe in the UK. Yard density at Prince Rupert in Canada was 113% and delays to berth see some ships having to wait between 38 and 45 days. This issue is sure to continue and even worsen through 2022.
Inflation. Inflation affects all aspects of the market, and supply chains are sure to be heavily affected. Supply chain challenges are known to be a cause of inflation, but now we see inflation affect the supply chain. As the supply of goods and services slowly deplete and struggle to satisfy the high demand, which continues to increase, prices are sure to increase while commodities decrease in availability.
Uncertainty regarding manufacturing. The pandemic, specifically the Omicron variant, has caused major uncertainty regarding the manufacturing of goods. As the Omicron variant caused harsher lockdowns across the globe, factories and manufacturers have had to slow down or completely stop business for the duration of the stricter regulations. The stricter regulations cause a decrease in production which results in a lack of goods as well as shipping delays. This also affects the marketing industry as marketing campaigns based on goods that are not available go to waste.
A shortage of labour and materials. Due to quarantines around the world paired with crashing economies, supply chains in 2022 will be affected by less available labour. Millions of people across the globe have either quit their jobs or been retrenched due to the pandemic. Now the manufacturing sector has millions of unfilled jobs which will prove to be an obstacle in 2022. Unfilled job positions result in the operations of manufacturers being stunted. Supply chains will also be challenged by materials not being readily available. All major commodities have experienced a spike in price or its scarcity, which causes shortages.
Uncertainty of demand. Due to the uncertainty brought on by the pandemic, it has become a challenge to successfully forecast demand. This will continue to affect supply chains throughout 2022 as data from the past two years is unreliable. What is sure is that consumers are sure to support the brands and suppliers they trust. This was seen over the festive season as out-of-stock messages increased. According to Adobe Analytics, out-of-stock messages increased by 172% when being compared to 2020.
Shipping delays will be blamed on courier companies. Regardless of the known supply chain challenges and challenges brought on by the pandemic, consumers still expect fast and safe shipping. According to Deloitte, at least 30% of consumers put the blame on couriers and delivery companies for delivery delays. When in fact, delivery delays are mainly due to port congestion, the labour shortage, and lockdowns across the globe. As these issues continue to affect the supply chain throughout 2020, consumers will continue to blame couriers and delivery companies for shipping delays.
Although this wide range of challenges has been forecasted to challenge supply chains this year, every cloud has a silver lining. The challenges provide an opportunity for supply chain leaders to rebuild the affected supply chains. To do so, supply chain leaders will need to successfully budget, use new and improved technologies, and elect people well suited for specific leadership positions.