The Supply Chain Is Finally Improving

Don't look now, but the state of the global supply chain is a little less dire than it was in the summer and early fall.

Fewer Covid-19-related shutdowns at Asian factories have boosted production levels, and the end of the prime shipping season for holiday shopping has eased demand for shipping containers by a slim margin, with prices retreating by the greatest amount since the pandemic began, The Wall Street Journal reports. Though the gains are fragile, some predict a corner could be turned in early 2022, after the Chinese New Year.

As the unrelenting demand for consumer goods met supply chain bottlenecks over the course of the past year, inflation has risen and slowed the U.S. economy's growth. But major retailers were able to move early and quickly enough to bring their holiday goods stateside, and a Deloitte report released Monday found that consumer spending in early holiday shopping has risen beyond pre-pandemic levels.

Though it is a positive sign for the economy, the increased spending prevents the supply chain from catching up, even if things are moving slightly faster. The Port of Long Beach and the Port of Los Angeles, the two most important ports for receiving Chinese imports, had 71 container ships waiting offshore on Nov. 19, down from 86 three days before, but still miles away from before the pandemic, when any ship being kept waiting was a rarity, the WSJ reports. 

Part of that could be chalked up to the decision by President Joe Biden and a handful of major retailers to move to round-the-clock operation, though the effects of any policy changes will take a long time to be fully felt. One persisting issue is a labor shortage at seemingly every point in logistics networks, from factories in Asia to truck drivers and warehouse workers domestically. Yet optimism is creeping into the market nonetheless.

“Globally speaking, the worst is behind us in terms of the supply-chain problems,” Oxford Economics' head of Asian operations Louis Kuijs told the WSJ.