Staying up to date with news and current events is the top platform activity amongst 28.8% of LinkedIn users. Trending Google searches as of June 2022 were recession, stock market and housing market. No matter if the intention of people is to stay informed or to stay protected, the lurking threat of a recession seems to be the headline. What sparks more concern is the “economic hurricane” that Jamie Dimon, CEO of JPMorgan Chase, termed. While we are unable to define economic hurricane, we can guide through the events of 2022, which might have caused such a thing. Through the good and the bad, here’s what has happened the last six months:
At the start of the year, truck capacity was tight as the Omicron variant and vaccine requirements flamed the Freedom Convoy protest around the US and Canada. The market volatility at that time caused a number of shippers to eliminate 12-month contract rates. Fuel prices in January were at $3.28 which, even at that time, was expensive. If you can remember, for months around 2020 we became comfortable paying less than $2 per gallon. Consider this the beginning of cost increases brought on by higher demand and lower production.
In February, Ukraine was invaded by Russia. This was a conflict that had been going on for years, but low on the radar of many. The public announcement by Putin of “military assault against Ukraine to aim demilitarization” quickly erupted into news headlines. Many western world leaders responded with unprecedented sanctions and condemning Putin’s and Russian Oligarch’s actions.
A week later in the US, President Joe Biden had the opportunity to speak of his steps to aid Ukraine in the State of Union Address. Hope was flying for some Americans after the speech supporting the Biden-Harris Administration’s plan highlighting “Buy American”, Ukraine, Economic Progress Report, Bipartisan Infrastructure Law, Inflation, Insulin, Energy Efficiency and more.
Since the beginning of 2022, every supply chain was battling to maintain affordable prices and delivery for customers. After over 100 days of the Ukraine-Russian war, the Ukrainian President Zelensky continues to meet with world leaders to push a plan that would economically force Putin and other Russian oligarchy to end the war on Ukraine. This pressure on Ukraine and Russia drastically effected steel, oil and food around the world — more cost increases. In China, the Shanghai Port had a local COVID outbreak, causing strict testing requirements and lockdown. The decrease in any operations in the city created a backlog of over 300% in trucking and port production creating an even larger backlog of orders — even MORE cost increases.
Conversation in April led to “What’s Next for Summer 2022?” It seemed every industry and/or product had a root problem that was affecting business to a detriment. For the following months, shelves were empty with no baby formula or beef, gas prices continue to rise and both used cars and new cars seem out of the possibility.
Could these last six months of events cause an economic hurricane? The optimists believe that it will be okay and the pessimists, not so much. The realists are working with logistics professionals to lead discussions around change and prevention. Company leaders are seeking advice from supply chain experts to learn how their businesses can make a difference. This article is our thanks to the experts that have the knowledge to guide a struggling organization to regain its ability to manage customer expectations, environmental footprint and cost optimization.