A Year in Summary: Supply Chain Headlines 2022

The spread of COVID-19 has wreaked havoc on global supply chains. Supply chain leaders throughout the world have had to get creative to keep vital services running during the pandemic and beyond.

The epidemic has also served as a severe test of business ethics and missions. Businesses will be evaluated by customers, financiers, authorities, and communities based on how they handle the current era of instability.

As 2023 quickly approaches, businesses must contend with a new onslaught of hurdles standing between them and e-commerce success.

Consequently, digitally native organizations have fantastic potential because of e-commerce, rising consumer confidence, pent-up demand, and accumulated savings.

Today, we'll discuss the major supply chain headlines in 2022 so you can better prepare for 2023. Let's begin!

The State of Supply Chains in 2022

Companies that survived last year's turmoil typically got lean, sold inventory, and focused on working capital.

Supply chain crises felt unmanageable at times. Suppliers and manufacturers worldwide have faced severe supply shortages, delivery delays, and extended backorders.

Difficulties in the supply chain are expected to last until the end of the year. These issues are driven by rising consumer expenditure, increasing demand for online convenience, and last year's limitations.

Companies are adapting to 2022's shaky supply chain network by tackling inefficiencies and working smarter, not harder.

Supply Chain Headlines 2022

January: The Semiconductor Supply has "Plunged," According to the U.S. Department of Commerce

Due to worldwide scarcity, American manufacturers have seen their supply of chips dwindle. Because of the sudden increase in demand brought on by the pandemic, chip manufacturers were unable to keep up with manufacturing, having a negative impact across several sectors, including the Smartphone, appliance, and vehicle markets.

According to a recent poll, there will be a 17% increase in demand for semiconductors from 2019 to 2021. Secretary of Commerce Gina Raimondo stated, "With skyrocketing demand and full utilization of current manufacturing facilities, it's apparent the only approach to solve this situation long-term is to strengthen our domestic manufacturing capacity."

Recently, the U.S. government announced new laws and promised to invest $52B in chip manufacturing and research. In 2021, the Senate approved this financing in an effort to lessen reliance on China, a major supplier of the components, in the face of continued supply chain difficulties.

February: US Announces Steps to Bolster Critical Mineral Supply Chain

The Biden administration has unveiled governmental and private sector steps that it claims would strengthen the supply chain for rare earth and other critical minerals used in technology ranging from consumer appliances and electronics to military weaponry. By taking these measures, the United States will become less reliant on China, a significant producer of these components.

Vice President Joe Biden declared from the White House, "China controls most of the world market in these minerals." If the United States relies on China for the raw resources that drive the production of today's and tomorrow's products, it will be impossible to construct a future in which those goods are created in America.

March: Apple, Others Face Shipment Delays as China COVID Curbs Squeeze Suppliers

If China continues to implement COVID-19 lockdowns, it is possible that shipments of some Apple products, as well as Dell and Lenovo computers, will be delayed.

The worldwide supply chain is feeling the effects of China's rush to contain the COVID-19 outbreak, which has clogged transportation routes, trapped workers, and forced thousands of businesses to close as they wait for official authorization to reopen.

The duration of lockdowns is only one of many variables that will determine the ultimate effect on Apple's supply chain.

Analysts have speculated that the corporation may reroute production away from Shanghai and Kunshan and towards other cities where facilities are not currently under lockdown. One such city is Shenzhen.

April: Biden-Harris Administration Announces $703 Million to Improve Port Infrastructure, Strengthen Supply Chains, and Lower Costs

The U.S. Department of Transportation announced $703 million for 41 port improvement projects in 22 states and one territory. The investment will assist coastal seaports, Great Lakes ports, and inland river ports, improving supply chain stability through greater port capacity and resilience, more efficient operations, decreased port emissions, and new labor possibilities. These investments are aimed at helping households receive items faster and cheaper.

May: White House Touts Efforts to Improve Working Conditions for Truckers

President Joe Biden and Transportation Secretary Pete Buttigieg, among others, held a press conference on the White House lawn to discuss the administration's Trucking Action Plan and its goals of increasing the number of trucking jobs and improving working conditions for truck drivers.

Buttigieg said at the time, "This meets two core goals that the president has put out: fixing supply chain disruptions to cut prices for families, and delivering employees the compensation and the respect that they deserve."

He said that more work was needed to attract new workers and retain current truck drivers.

June: World’s Largest Truck Maker Says it’s Facing Enormous Supply Chain Pressure

As the effects of supply chain disruptions continue to reverberate worldwide, the CEO of the largest truck manufacturer in the world has expressed concern that a lack of necessary components is delaying the assembly of thousands of trucks.

Martin Daum, CEO of Daimler Truck spoke with CNBC about how the current global supply chain crisis is among the worst he has experienced in his more than 25 years in the industry. This has led to substantial bottlenecks throughout the company's array of brands.

Daum, whose vehicles are utilized in other crucial industries, including logistics and construction, said, "We are under great strain on the supply chain."

The need to "touch a vehicle three, four times to install the missing pieces" makes this "one of the worst years ever in my lengthy career in trucking," he said.

July: Tesla Rewrites Software to Get Around Chip Shortages

Chip shortages have significantly impacted Tesla's manufacturing, and Elon Musk stated in January that part limits were one of the key reasons the company will not launch any new vehicles this year. 

This decision was made in response to the fact that chip shortages had occurred. In the face of what Musk has termed "chip drama central," the manufacturer of electric vehicles has intensified its emphasis on innovation.

The strategic use of semiconductors that Tesla has implemented has resulted in a reduction in the number of chips necessary to create automobiles, enabling the automaker to achieve maximum output. 

Musk stated on the conference call from the previous week that the lack of chips "has worked as a forcing mechanism for us to minimize the number of chips in the car." To get the most out of the company's limited supply of semiconductors, Tesla is rewriting some of its software.

August: Toyota Profit Plunges Amid Supply Chain Chaos

Even though Toyota had a record-breaking year in terms of profitability, the company's fortunes took a turn for the worst in the most recent quarter due to supply chain turmoil and rising prices.

Profits fell between April and June, highlighting the world's largest carmaker's difficulty in maintaining its excellent performance and enormous margins in the future.

Despite the quarterly decline, Toyota boosted its profit and sales projections for the whole year. The majority of this readjustment, however, is the result of a substantial gain brought on by the yen's depreciation against other currencies.

Despite the brighter forecast, the revised profit projections decreased from the prior fiscal year. Despite the uncertainty caused by the global COVID-19 epidemic and the lack of semiconductors, Toyota still needs to revise its projections for unit sales or production.

September: Global Trade Turmoil Set to Calm Down as Slowdowns Deepen

Because of rising air freight prices, Morgan Stanley's supply-chain stress index decreased once again, but at a slower rate than in prior months.

The newest Global Trade Monitor from the Wall Street company details the progress made, such as reduced shipping costs for raw materials, faster delivery times, and fewer logistical backlogs in the United States, the United Kingdom, Taiwan, and South Korea.

Morgan Stanley predicts a slowing of international trade as a result of falling consumer confidence and a weakening global economy. The bank predicts a recession in the euro area this winter, higher inflation will slow the US economy, and China will have a "very sluggish rebound" in the near future.

October: Supply Chain Snarls Loosen for U.S. Companies, but Plenty of Problems Remain

John Ehresmann is thrilled that the price of buying a load of timber or transporting a shipping container from Asia to a U.S. port has returned to more reasonable levels.

Unfortunately, it is not the case with all of his purchases. The vice president of global supply at Graco Inc (GGG.N), based in Minneapolis, has seen obvious improvements in some areas of his supply chain.

Graco makes fluid handling equipment, such as paint sprayers. However, due to the intricate structure of global supply networks, businesses like Graco still face difficulties, since the absence of even a single component can cripple operations.

November: Business and Climate Leader Applaud President Biden’s Proposal Plan to Protect Federal Supply Chain from Climate-Related Risks

President Biden emphasized a historic move to combat greenhouse gas emissions and safeguard the Federal Government's supply chains from climate-related financial threats. 

In response to the President's Executive Orders on Climate-Related Financial Risk and Catalyzing Clean Energy Industries and Jobs through Federal Sustainability, the Administration proposed the Federal Supplier Climate Risks and Resilience Rule. It would require key Federal contractors to publicly report their greenhouse gas emissions and climate-related financial risks, as well as set science-based emission reduction targets.

Business executives, industry, organizations, and climate campaigners clapped. The proposed Federal Supplier Climate Risks and Resilience Rule will improve vulnerable federal supply chains, increasing efficiency and reducing climate risk.

December: U.S. Manufacturing Orders from China Down 40% in Unrelenting Demand Collapse

Due to canceled container ship sailings and export rollovers by ocean carriers, U.S. logistic managers expect delays in the delivery of products from China in early January.

To balance supply and demand, carriers have announced more blank sailings and suspended services. “The relentless decrease in container freight prices from Asia, resulting by a slump in demand, is forcing ocean carriers to blank more sailings than ever before,” said Worldwide Logistics Group CEO Joe Monaghan.

U.S. industrial orders in China are down 40%, according to CNBC. Due to fewer orders, Worldwide Logistics expects Chinese facilities to close two weeks earlier than usual for Chinese New Year (Jan. 21). The next seven days are a national holiday. Many manufacturers will close early in January for a holiday, Monaghan added.

Final Verdict

Now that we're almost into 2023 and have escaped some of the worst global supply chain projections made the year before, there's hope that things will improve.

Startups and Tier 2 and Tier 3 logistics, transportation, and data science companies may hope to revive with growing technologies in the upcoming years. They developed tools to minimize global supply chain management vulnerabilities.

The real differentiator for businesses to get the global supply chain back on track will likely be cutting-edge technologies.