Supply Chains Are Slowly Mending

The term “supply chain” has been banned from use in my home. It was used repeatedly by a contractor we had engaged to explain long delays in completing work. In the end, an eight-week project took eight months to complete.

Those initiating renovations today can expect a better experience. While still far from their former efficiency, global supply chains appear to be healing. And that will be good news for inflation.

The logistics challenge introduced by the pandemic was immense. Manufacturing facilities have faced periodic closures; transit has been disoriented; and consumer tastes have shifted. While modern supply chain management has been raised to a high level of sophistication, the models built to keep things moving had never solved for a problem the scale of COVID-19.

A broad range of indicators illustrate just how tangled things became. Transoceanic shipping costs increased by five to ten times, depending on the route. Delivery times for raw materials, work in process and finished goods extended to record levels. Armadas of ships have waited for weeks and months outside the world’s largest ports, waiting to be unloaded.

Consumers have been affected in myriad ways. Product availability has been irregular; there are still items that were regularly in stock prior to the pandemic, which are scarce today. And higher shipping costs have been passed along in the form of higher prices for a range of products.