Will the Supply Chain Industry Recover in 2022?

supply chain difficulties

Current supply chain chaos is likely to last well beyond the holiday season. While some challenges may be over by 2022, experts believe that we won’t see a full supply chain recovery this year.

Now, experts are beginning to talk about when they think the supply chain will finally recover— and if we’ll be back to business as usual by the end of next year.

Here’s what we know about the state of the supply chain so far, its likely future in 2022 and how businesses can act to navigate these ongoing supply chain difficulties.

The Top Supply Chain Challenges Right Now

Current disruptions can be blamed on a variety of different factors that have made shipping goods difficult, even as the COVID-19 pandemic continues to wind down. 

Storage space is one major challenge. Warehouses are overflowing as businesses prep for peak season. Retailers are seeing record levels of demand right now — and as they stock up for the holiday rush, they’re beginning to push the limits of available warehouse storage space. 

Doug Kiersey, president of Dermody Properties, which owns warehouses used by some of the country’s biggest retailers, told NPR in mid-November that “in some markets … we’re over 99% occupancy.”

Some larger retailers are even beginning to buy their own warehouses to guarantee storage space that’s available when and where they need it. 

The storage supply crunch is part due to the lingering effects of COVID and in part due to the whiplash caused by the sharp recovery in demand, leading to unprecedented sales numbers in some sectors.

At the same time, it’s become much harder to move goods from Point A to Point B. Port congestion is at an all-time high at major U.S. ports like the Port of Los Angeles. Challenges in ocean freight have started spilling over to other industries, as well. 

Businesses, realizing that goods shipped by sea may end up stuck at port, have started to shift to using air freight. As a result, demand for air shipping has started to outpace supply. Similar issues are also cropping up in the trucking industry.

In general, every link in the supply chain is under serious strain right now, and the end-of-year shopping season will be a serious test for business logistics around the world. 

Supply Chain Challenges Could Last into 2022

Supply chain experts are divided on exactly when these challenges will end. Some shippers, for example, predict that port congestion could last well into next year, while others are much more optimistic — saying that we could be free of congestion by New Year’s.

In warehousing, the tone is much less optimistic. Some industry experts and business leaders don’t see an end in sight for the current crisis, meaning that it could last well into next year. 

In an October 28th analyst meeting, Tarek A. Robbiati, finance chief at information technology company Hewlett Packard Enterprise Co., said that “supply chain constraints will continue to be in the market all the way to the second half of calendar year 2022,” according to the Wall Street Journal.

All of these problems are also being made worse by the ongoing labor shortage. As with many current supply chain challenges, we don’t have a good idea of when the labor gap will start to close. While experts had hoped the shortage would begin to ease in fall, it seems more likely that the shortage will continue into 2022.

Businesses may get some relief in late 2021 and early 2022 as certain supply chain challenges begin to end. However, many companies are also treating these challenges as if they’ll become long-term issues. 

Preparing for the possibility of an extended supply chain crisis may be the best option for businesses still planning how to organize logistics next year.

What Businesses Can Do to Manage Supply Chain Woes

Taking steps now can help businesses prepare for ongoing supply chain struggles. Even if storage space remains hard to come by and slow delivery times linger, there is a lot that businesses can do before the supply chain returns to normal.

‘Diversifying distributors can help businesses guarantee the availability of products and the chance of timely delivery even as the supply chain remains volatile. 

For example, if one distributor doesn’t have the raw materials or products your business needs due to a local supply crunch, or if regional supply chain issues are making goods hard to ship, you may be able to count on a secondary shipping partner.

Building a stockpile of goods can help you navigate shortages, but space may be increasingly difficult to find. Regular communication and strong business relationships with both distributors and other shipping partners, like warehouses, can help you stay on top of disruptions and better plan for localized shortages. 

While some businesses prefer to work with the business that can offer the lowest available price on shipping or storing goods, working with businesses you have worked with in the past can help to create stronger business relationships that may be valuable during times of supply chain instability.

Preparing for Supply Chain Challenges in 2022

While some supply chain challenges may end before New Year’s, it’s likely that a full recovery won’t come until some time in mid-to-late 2022, or even further in the future.

Preparing now can help businesses get ready for the long run, and build supply chains that are better equipped for future disruptions.

Simple changes to how a business sources, stores and ships goods can make supply chain operations better prepared for current and future challenges.

By Eleanor Hecks

Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philly with her husband and pup, Bear.