When companies, consumers, and politicians worry about supply chain disruptions, indications signal a potential breakthrough. Although these challenges put much stress on the market, not everyone involved seems to have a hard time. For example, this situation appears to be a moneymaker for ship owners. Their earnings are similar to 2008 levels, a time even before the financial crisis.
But is shipping the only industry to smile in the time being? Or are there are signs of recovery from these supply chain disruptions?
It may be a positive year in earnings for the shipping industry so far. Still, cargo shipping costs have dropped by almost a half during the last month, according to the Baltic Exchange Dry index. This is possibly an indication that the market does not expect port congestion to be a big issue coming next year.
While there is still a high demand for goods around the globe, at the same time, the delivery time index has gone down to 34.8 last month (the lower index, the higher transportation delays). As a result, businesses have not built up their inventories yet, eventually leading to shortages. However, experts believe that this situation will get only worse in 2021. Still, this bottleneck is expected to improve in the first quarter of 2022.
When it comes to commodities, supply chain disruptions have led many prices to skyrocket. For example, wood, coal, or paper prices were recently flying high mainly due to shortages. Still, prices for at least these commodities seem to have a downward trend.
The pandemic was the prime reason that supply chain disruptions began in the first place. Additionally, it seems that it will also be the decisive factor that will determine if these disruptions will continue.
Nevertheless, the news coming from key manufacturing areas in Asia are encouraging as vaccination rates are high and are expected to grow further in 2022. At the moment, manufacturers do not operate at full capacity as they need to make sure that there will be no further outbreaks of the virus causing further damage. Having the pandemic under control will be key to improving the global supply chain networks.
It’s been a while since supply chain disruptions started affecting the international markets, sending prices through the roof and causing severe delays. Could these encouraging signs signal the beginning of the end of the supply chain challenges? All that remains now is to see how markets will react and if COVID-19 will stay under control. So far, the indications are positive, and let’s hope that it will continue this way.