6 Global Supply Chain Trends to Watch for in 2023

When the COVID-19 pandemic swept across the world, the global supply chain was hit hard and has struggled to recover ever since.

Retailers worldwide have been hit with the challenge of overcoming supply chain obstacles for years now, and are using different tactics to overcome them. This holiday season, major retailers suggested that shoppers should buy early to avoid shipping issues that might arise due to supply chain problems.

Early-shopping was a short term solution to an immediate problem, but what does supply chain look like for 2023? Here are 6 trends experts are paying attention to.

Government Intervention

So far, government has not had direct intervention throughout the whole supply chain crisis. However, with issues such as rising inflation, there is speculation that government could get involved as other issues may cause problems.

“One of the ways governments are starting to respond to the challenges these dynamics present is to look more closely at supply chains and supply chain resilience as a national security imperative,” a report from research and data firm IHS notes. It goes on to state that, “If this continues – as it seems likely to do – government intervention with trade and sourcing is likely to become a more pronounced challenge for supply chain managers. The war in Ukraine has amplified and accelerated trends already set in motion.”

Shortages Could Transform to Surplus

Over the summer, many major retailers had huge discounts on clothing, home goods and more. This was because the stock they had ordered almost a whole year prior had finally arrived causing a giant surplus of inventory.

As we continue to move toward a recession, demand is likely to reduce, leading to even more increased inventory. Last year’s shortages could mean an oversupply for 2023.

Labor Market Will Not Improve

As you may have noticed on your last trip to Chipotle, or when you tried to cash your last check at the bank, industries across the board have struggled with staffing employees to keep day-to-day operations of an organization running. It’s not been completely out of the ordinary to see signs on the doors of a business saying that they’re closed, or only running drive-thru lanes, or asking for patience from customers – all due to staffing shortages.  This has also affected the shipping industry.

In addition to shortages, workers are seeking more pay so they can keep up with inflation. Add China’s zero-COVID policy to the mix, along with workers striking until their demands are met, and all of these ingredients result in a dish that serves more disruption and congestion in the supply chain.

A Surplus of Ships

Finally, a trend that is a positive for the supply chain industry. A surplus of ships in expected in 2023. This means lower container rates, and lower shipping costs for consumers.

Climate Change Could Pose Problems

Another problem to add to the recipe of issues that are causing supply chain headaches includes climate change.

Germany is experiencing low water levels, presenting issues for ships set to transport goods. In the U.S., the Mississippi river is also experience a drop in water levels, which has caused a jam up of over 100 vessels. Add hurricanes and heat waves to the ingredient list and you find yourself with a potential for supply chain disaster.

Things Actually Are Getting Better

It’ll take a while, but according to the Logistics Managers’ Index for September, “September’s future predictions hint at normalization and a return to business as usual over the next year.”

Additionally, a report from Sea-Intelligence, a supply chain research and analysis firm, says that half of the congestion that has been causing issues in the current supply chain climate have been resolved, and the pace for recovery is improving even more.

The report poses the question, “How long will it take for this gradual improvement to get to a point where the market is fully back to normal?” The answer – “There are multiple different ways to look at this, [but all indicate] a full reversal to normality should come in March 2023.”

Story via Fast Company