Moody’s Predicts Worsening of the Global Supply Chain

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Everyone is talking about it. I cannot remember a time in our recent history where the state of the global supply chain was regularly a leading story on the news. Port congestions. Computer chip shortages. A lack of truck drivers. All of these things are putting the world’s supply chains under duress that it has not endured before.

The slowdown in the supply chain is starting to drive inflation, and consumers are starting to feel it. Last week, on his Real Time show Bill Maher joked that he “felt like he was shopping at the airport.” The joke hit home because it is not all that far from the reality many people are seeing.

Moody’s Analytics recently warned that supply chain disruptions “will get worse before they get better.”

“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” Moody’s report stated.

“Border controls and mobility restrictions, unavailability of a global vaccine pass, and pent-up demand from being stuck at home have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise and GDP growth worldwide will not be as robust as a result,” the report continued.

Moody’s cited the lack of a “concerted global effort to ensure the smooth operation” of the worldwide logistics network.

Others are not quite as gloomy in their predictions.

JPMorgan Chase CEO Jamie Dimon recently said, “This will not be an issue next year at all. This is the worst part of it. I think great market systems will adjust for it like companies have.”

It’s not clear how market systems “will adjust for it” when it comes to shortages of things like dock workers and truck drivers. As long as consumption remains high, there will be a need for these positions to be filled.

The impact has already been seen in the retail space and among ecommerce businesses. Shoppers are starting their holiday shopping earlier than ever, not wanting to face the possibility of empty store shelves in mid to late December.

This is contributing to more strain on the supply chain.

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