Shortage of computer chips. Epic Port Congestion. And a serious shortage of truck drivers. The world’s delicate supply chains are under extreme stress.
The supply chain nightmare is driving up prices for consumers and slowing the global economic recovery after Covid-19. Unfortunately, Moody’s Analytics warns that supply chain disruptions “will get worse before they get better.”
“As the global economic recovery continues to accelerate, what is increasingly evident is how it will be hampered by the supply chain disruptions that are now appearing around every corner,” wrote Moody’s in a Monday report.
Indeed, the IMF on Tuesday lowered its 2021 growth forecast for the United States by a percentage point, the highest for any G7 economy. The IMF cited supply chain disruptions and weakening consumption – which were in part due to supply chain bottlenecks such as the lack of new cars to buy in a context shortage of computer chips.
“Border controls and mobility restrictions, the unavailability of a global vaccine pass and pent-up demand to be stuck at home have combined for a perfect storm where global production will be hampered as deliveries are not made on time, costs and prices will increase, and global GDP growth will not be as robust as a result, ”Moody’s wrote in the report.
Moody’s said the “weakest link” could be the shortage of truck drivers – an issue that has contributed to port congestion and the drying up of service stations in the UK.
Unfortunately, Moody’s warned that there were “dark clouds ahead” as several factors make controlling supply chains particularly difficult.
First, the firm highlighted the differences in the way countries are battling Covid, with China targeting zero cases and the United States “more willing to live with Covid-19 as an endemic disease.”
“This presents a serious challenge for the harmonization of rules and regulations by which transport workers enter and exit ports and hubs around the world,” Moody’s wrote.
Second, Moody’s has indicated that there is “no concerted global effort to keep the global logistics and transportation network running smoothly.”
Others are much more optimistic about the outlook for the supply chain.
JPMorgan Chase CEO Jamie Dimon said on Monday these supply chain hiccups would fade quickly.
“It won’t be a problem at all next year,” Dimon said at a press conference hosted by the Institute of International Finance, CNBC reported. ” It’s the worst. I think large market systems will adapt to it as companies have. “