Persisting supply chain issues are turning into a real-life horror story for many businesses across the globe. While it is not entirely clear exactly how long the nightmare will last, experts are certain it will not end anytime soon.
Earlier this week, the World Trade Organization (WTO) said during the FT Africa Summit that supply chain problems are likely to continue for at least several months. Some experts predict the crisis could stick around even longer into 2023 and 2024 in some parts of the world. "When the Covid-19 pandemic crippled international trade, freezing supply chains, it was thought that global supply chain disruptions would be temporary," according to a recent Credendo report. "However, they are continuing to wreak havoc in many sectors."
Now, businesses are left scrambling to find ways to cope with rising commodity and shipping costs that accompany the severe supply chain disruptions. "Supply chains are sometimes not very transparent, even for different stakeholders in the same supply chain," the Credendo report reads. "This makes it impossible to identify the different bottlenecks and therefore to solve the problem."
The U.S. government is imposing short-term solutions hoping to alleviate some cargo bottlenecks. For example, the Ports of Los Angeles and Long Beach recently started operating on a 24/7 schedule in an attempt to reduce a record backlog of 157 ships waiting to unload. Moody's Analytics predicts this increase in operations should improve container flow by about 10%. "We have about two weeks' worth of work sitting at anchor right now," Gene Seroka, executive director of the Port of Los Angeles, told CNN. "The question right now is: How do we segment this cargo?"
However, it is yet to be seen if this will be enough to solve the supply chain crisis permanently. Businesses are beginning to restructure and adopt new models to avoid supply chain issues in the future. "The current just-in-time supply chain model with a variety of suppliers in a variety of countries has revealed some limitations," Credendo says. "Nowadays, the question of the reshoring of industrial production seems to be gaining momentum."
Be sure to read the November digital issue of Business Credit magazine for a special in-depth look at today's global supply chain crisis.
-Annacaroline Caruso, editorial associate