Although every year has its fair share of challenges, it feels as though the supply chain has not been able to catch a break since the pandemic. To our benefit though, these challenges have shone a light on the importance of the supply chain and the people that make it successful. Now, it seems that everyone is paying closer attention to our industry and has gained a newfound appreciation for the skillset required to keep the global economy running.
As we emerged from the volatility of COVID-driven demand swings and supply challenges, 2022 seemed to be entering a “new normal.” This was a normal that supply chain professionals could work with. We have always planned for the synchronization of supply and demand. But the COVID-zero policies of certain countries made demand planning a nearly impossible task in 2022. Port slowdowns, staffing shortages, and looming labor unrest made logisticians test their agility. At the same time, consumer expectations for nearly immediate delivery remained high.
Then inflation and the Russian invasion of Ukraine entered the global picture, ultimately becoming the defining issues of 2022 that nobody could escape. Consumers were being forced to make tough spending decisions, creating wide swings in demand. There was a glimmer of hope when, in October 2022, inflation began slowing. Nonetheless, companies are now making serious budget cuts, shifting from hiring as fast as possible to making layoffs.
The year began with gas prices rising drastically, catalyzed by Russia’s invasion of Ukraine. We continue to see gas prices fluctuate—now independently from the ebbs and flows of the war. Carriers responded in unprecedented ways. Fuel surcharges became the largest profit driver and biggest lever for many carriers throughout 2022. With the double whammy of inflation, these increases began to destroy consumer demand and are now making the industry long on capacity once again.
So, what does this mean for supply chain professionals and what is to come for 2023?
Logistics experts have always had a difficult role to fill. However, after the past three years, the broader appreciation for that role and the new “muscles” that have been developed as the industry has risen to the challenge will serve us well going forward. We will respond more quickly, deploy a wider and deeper skillset, and command more respect.
In 2023, I believe we will begin to see a return to a more typical level of chaos. I expect an increase in carrier bankruptcies, meltdowns of nonviable business models, geopolitical disruptions, attempted price increases, increased inventory costs, and unrealistic consumer expectations. In short, just what we deal with year-in and year-out.
2023 is going to be a great year for the supply chain!
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