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"Supply Chain Collapse Trigger Perfect Storm
For Bankruptcies As Massive Shortages Emerge"
by Epic Economist
"New developments at ports worldwide are converging to create a new series of supply chain disruptions that are threatening to turn global trade upside down. Experts are actually using the term “doomsday scenario” to describe the threats that are emerging on the horizon. In America, several businesses are hanging by a thread as supply chain issues become the new normal. Meanwhile, chaos is making a comeback at ports and the worsening shortage of containers means more shipping delays are ahead.
A new report released by the business group US Logistics Inc. revealed that supply chain disruption is set to worsen throughout the third and fourth quarters of 2022 as a series of local and global factors have caused issues for all elements of the supply chain, with bottlenecks such as a growing shortage of shipping containers, labor strife at ports, and a lack of enough truck drivers, warehouse space and semiconductor chips all impacting on the way that goods are moved around the world.
In the U.S., retailers are scrambling to meet consumers’ demand as product shortages and stockouts become the new norm. A survey from Brightpearl exposes the very thin ice on which U.S. retailers are standing. Researchers found that over a third of U.S. retailers are just two months away from running out of cash. The study of 500 retailers also found that 80 percent have been hit with supply problems since the start of the year; 52 percent have experienced stockouts, resulting in a loss of sales; and the supply crisis has added 23 percent to retailers’ costs over the last year, with 51 percent saying they have increased prices as a result.
“We are in the worst supply chain crisis that any of us can remember and there is no sign of the problems easing before the end of the year,” said Brightpearl CEO Derek O’Carroll. The founder and CEO of global trading company Versa, Kath Blackham, noted that if those problems aren’t fixed in the next six months, there’s a chance many of these companies will go bankrupt. “If there is not consideration put to the supply chain issues in the next six months, I really feel like there will be a lot of agencies that just can’t survive financially,” she said in an interview last week.
Adding fuel to the fire, worldwide port congestion is being severely aggravated by labor slowdowns and strikes at U.S. and European ports, which are consequently creating a massive backlog of containers that will take months to clear out, experts say.
According to Kerem Alkin, an economist, and professor at Medipol University, the world is moving towards a doomsday scenario. In a recent paper, the professor defined such ‘doomsday scenario’ as the convergence of three major threats facing the world economy and international politics – and all of them are rooted in the supply chain crisis. Alkin argues that energy, food, and shipping disruptions are set to reach even more unmanageable levels in the coming autumn and winter, which can turn the lives of billions of people upside down.
On top of everything else, the concretization of this rather apocalyptic scenario will come as major economies fall into recession, inflationary or stagflationary crises, and also face an uptick in unemployment rates. Supply chains connect the entire planet and provide us with goods that are essential to our daily lives. But when that flow is interrupted, the foundations of our society start to crumble, and turbulence starts to emerge."
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