It all starts with COVID-19, as the pandemic has triggered a ripple effect throughout the global supply chain. The Delta variant has continued to cause plant closures in Asia.

Port closures have caused a supply bottleneck awaiting both containers to pack and ships to transport them. This has increased the cost of transporting goods. For example, where it used to cost $3,000 to ship a container from southern China to the west coast of the United States, now it can cost $20,000 or more. This will be reflected in the cost that we must pay as consumers.

It has been highlighted that 90% of the products in the world move by ship and that a large part of them come from China. He pointed out that the infections and restrictions imposed by the pandemic affected the workers in the port terminals, “breaking” the chain numerous times.

According to World Bank estimates, the global economy contracted by 3.59% during 2020 and as a consequence of the restrictions imposed to deal with covid-19. The IMF projected a rebound of 6% for 2021, in a context of slowing growth.

Focus areas that companies should think about to ensure they have the right solutions to address these challenges include:

  • Implement risk mitigation strategies. The pandemic has exposed the weaknesses and risks of a global supply chain. When a furniture factory shuts down in Vietnam, or a shipment of toys gets stuck in a closed port, you need to have a “plan B” for your key products or components. By identifying alternative sources of supply and balancing offshore, quasi-offshore and onshore contract suppliers and manufacturers, you can significantly reduce the risk of disruption.
  • Incorporate inventory optimization strategies throughout your enterprise network to establish inventory safeguards at strategic decoupling points and buffer against disruptive events.
  • Improve visibility into real demand by taking into account leading indicators, such as sentiment analysis of what’s hot on social media. Early signals about actual sales, as well as how and where they are happening, are also needed.

In order to sustain the current business rhythm and guarantee the stability of the sector, it is necessary to respond to the challenges of the present and adapt to the demands that the future is already marking.

Currently, logistics agents around the world hope to solve as soon as possible the problems derived from the covid-19 pandemic that affect supply chains, such as the increase in transport rates, the shortage of containers and the congestion of ports, which should be highlighted among the most serious.