Most of us hoped COVID-19 would be firmly in the rearview mirror by the end of 2021. But unfortunately, the virus continues to cause issues across procurement, logistics, and transportation. For the moment, however, the supply chain has at least begun to show signs of recovery as bottlenecks begin to ease and production in Asia slowly returns to normal.
However, recovery won’t happen overnight. As a result, business leaders must continue planning for pandemic-related disruptions in the near term. This article will discuss some of the COVID-19 issues that manufacturers, retailers, service providers, and other supply chain stakeholders can expect to contend with for the rest of 2021 and into 2022.
Lingering Supply Chain Challenges
It remains challenging to predict what will happen with COVID-19 in the future. Though the logistics industry can expect to see relief from some pandemic threats starting early in 2022, some of those complications will likely drag on into 2023 or longer. Fortunately, two years of experience responding to COVID-19 has given experts a better understanding of how the virus behaves and how it can impact the global supply chain. Here are some problems that industry players can expect to linger:
- COVID-19 variants. Some experts fear that the rise of the Omicron variant will place additional strain on global supply chain operations. The Delta variant that hit in late 2020 brought a new wave of outbreaks and associated closures that threw a proverbial wrench in the global supply chain. Omicron has that same potential for disruption, especially since the efficacy of current vaccines against this new variant remains in question.
- Warehouse crunch. The eCommerce boom that caught the retail sector and its suppliers unaware in 2020 is still growing. As a result, it’s still causing elevated demand for industrial real estate. Other industrial operations also compete with warehouses for properly zoned industrial space, such as data centers, transportation facilities, and factories. Real estate developers will take several years to balance supply and demand, which means that warehousing and fulfillment costs will continue to rise, and capacity will remain low.
- Labor shortages. COVID-19 deaths in the United States will most likely pass the 800,000 mark by the end of 2021. Additionally, many American workers have chosen to leave higher-risk, in-person roles for jobs they can perform safely from home. In the business world, these factors have combined to create significant labor shortages, including in logistics and transportation. Businesses will continue increasing wages and benefits to compete for labor and invest heavily in technology that will help them do more with fewer workers.
- Inventory shortages and capacity crunches are causing inflation in everything from Thanksgiving turkeys and consumer goods to transportation services and warehouse rents. This unfortunate circumstance will only keep getting worse until the global supply chain manages to untangle itself.
- Port backlogs. Major U.S. ports appear to be getting a handle on bottlenecks thanks to 24/7 operations and efforts to remove containers from docks But, of course, it is the end of the year, which means higher peak season volumes may offset some of the efficiencies gained by the ports until holiday shopping winds down. Nevertheless, it seems likely that ports should get backlogs under control early in 2022, barring any additional unexpected setbacks.
While these concerns will plague logistics operators throughout 2022 to some degree, the outlook for the supply chain still looks better than it has since the beginning of the pandemic in 2020. Moreover, as vaccination rates keep rising and control measures stay in place, it has finally become possible to imagine what a post-pandemic supply chain might look like.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.