The Year in Logistics: Uncertain economic conditions are tilting the table

This is an excerpt of the original article. It was written for the January-February 2023 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2023

It feels like a normal holiday season. ”That was the report I got from the VP of global distribution at one of the country’s best known retail brands on the Monday before Black Friday. He added that the last time he felt that way was November of 2019. One of the perks of this job is that I get to talk to a lot of supply chain executives. In my conversations over the last year, I’ve learned two things. Operations, which was perhaps hardest hit at the start of the pandemic, has learned to operate in this new environment. Sure, there are still hiccups caused by absenteeism and inventory shortages. But those are situational—give them supply and…

Browse this issue archive.

Already a subscriber? Access full edition now.

Need Help?

Contact customer service

847-559-7581   More options

Not a subscriber? Start your magazine subscription.

COVID-generated turmoil that reshaped worldwide logistics in 2020 and 2021 has given way to something very different in 2022. Not to stability, exactly, but to another form of uncertainty—one that poses its own set of hazards and opportunities.

To stave off a potential economic catastrophe, the national governments of the United States and other countries injected trillions of dollars of pandemic relief into the world’s financial bloodstream. Fortified by the infusion, the U.S. economy grew 5.7% in 2021—its sharpest upswing since 1984.

Having averted the immediate threat of a potential depression, central banks now had to contend with a very different problem—surging inflation as relief money further boosted demand against still constrained capacity. They increased interest rates more aggressively than any time in history in order keep demand in check and prices down.

Then came Russia’s invasion of Ukraine in late February, which hobbled energy and food supplies, further driving up prices. The combination of varied inflationary factors, geopolitical tensions and sustained interest-rate hikes has cooled spending—and, therefore, the demand for logistical services.

As we indicated in a recent Kearney Global Business Policy Council article, these and related developments have contributed to broader uncertainty about economic conditions over the near and medium term.

SC
MR