"Amateurs talk about tactics," the saying goes, while "professionals talk about logistics."
Until the covid pandemic disrupted the world's trading system, it's a safe bet not many Americans knew or cared much about global supply chains.
After all, as long as the just-in-time systems worked, there wasn't anything to notice.
Of course, the past few years have introduced a wealth of new vocabulary to investors and the world at large. Armchair epidemiology has become a local blood sport. Pangolins briefly dominated cocktail party conversation, until the phrase “Quarantine Lockdowns” made the leap from a Michael Bay movie to municipal ordinance and put an end to all cocktail party conversations.
And the past year has given all of us a crash course in supply chain management. The team at Action Alerts Plus looks at some of the latest moves in this once little-noticed field.
“As Transportation Secretary Pete Buttigieg acknowledged, global supply chains have been dealt renewed blows as a result of the Russia-Ukraine war… as well as this latest COVID lockdown in China," the AAP team wrote recently. "To assess the impact, we'll be closely watching delivery time data for the next few months that several regional Fed banks produce as part of their monthly manufacturing reports.”
AAP reports that Amazon (AMZN) and UPS (UPS) have already begun adjusting their delivery network in response to these latest events. Among other moves, the companies have begun shifting products to warehouses outside of the hardest-hit areas of China and have even begun suspending all operations in southern sections of the country.
Meanwhile, European investors have already expressed concern over new bottlenecks that have begun to emerge in movement of durable goods.
There is concern "over rising energy costs and the impact on consumer spending in Europe. Supply chains were also of concern, with several portfolio managers sharing reported disruptions linked to the number of Ukrainian truck drivers who have since left to return to Ukraine to fight in the war," AAP noted.
"This is adding to the growing number of ships lined up outside major Chinese ports thanks to the latest iteration of the pandemic there. We will continue to monitor developments, especially because the longer this goes on, the more likely it could set back the progress we're seeing with U.S. supply chains."
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