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Supply Chain Recovery Will Be Slow at Best Featured

Supply chain issues have impacted global trade, investments and stock markets to an extent never seen before in 2021. Although the damage has been felt in almost every industry, it has affected the healthcare industry the least. On the other hand, tech consumers and industrial stock have suffered the most. Here is a list of the most affected sectors and how things are looking now and in the future.

Chip shortage will remain a key challenge in 2022

The shortage of chips has been the biggest headache in the technology space since the end of 2019. This was largely occasioned by the disruption of the supply chain. Furthermore, the leading manufacturers like Taiwan Semiconductor (TSM) have no capacity to meet the demand for chips, which is soaring across the globe to power tablets and personal computers. Furthermore, the high demand for electric vehicles in the US markets caught the automakers flat-footed, mainly by how the demand rebounded that emerged after the pandemic.

Automakers are trying to meet the demand by submitting large offers, which end up overwhelming chipmakers. Chipmakers are generally having trouble ramping up production because of the long time it takes to install new factory equipment.

Supply chains will recover in the next six months or one year

The damage caused by the pandemic and the widespread disruption has made the recovery of supply chains difficult. The disruption was caused largely by labour shortages. Although some supply chain problems are general, others are industry-specific. For example, sports companies are having a challenge sourcing raw materials, while hotel operators are challenged by a lack of raw. These disruptions have also impacted the fashion industry significantly, raising shipping costs for clothing and accessories and increasing the delivery times. Luckily, retailers that source their materials locally are doing well, while those that source from other countries have shown some vulnerability. This disruption is expected to continue up to next year. This, however, depends largely on the labour situation.

Industrial supply chain will continue improving this year

The industrial supply chain is still struggling will various problems like delays in shipping, lack of raw materials and labour shortages. However, the severity in these areas depends on the company. For example, homebuilders lack raw materials like timber and appliances like refrigerators. This may raise the price of homes while raising the cost of raw materials. This might result in a home shortage and a supply gap, which will not be closed until later this decade. It is estimated that the housing shortage will be around 3.8 million homes. To avert these challenges, companies are looking for alternate suppliers, and most of them are raising prices for the property. For industrial companies, the demand is strong, leading to an increment in prices. The improvement in supply chains is expected in 2022, although the mask mandates might cause some employees to quit jobs, which can exacerbate the labor shortage and continue the supply chain problems.

Freight companies will use their pandemic experience to reinvent themselves

The pandemic has been a great source of knowledge for freight companies, despite the challenges it caused. With the profits these companies raked during the chaos and the knowledge they obtained during the pandemic, they will reinvent themselves and expand into new markets. With the massive profits, they will build fleets of cruise ships, invest in port terminals and break into trucking. This will significantly alter the logistics and freight landscape and hopefully build resilient supply chains that can withstand future crises such as the current pandemic. This can be a good thing for the industry.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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