COVID-19 has caused many disruptions, but one we’re especially feeling now is in our supply chains. Impacts from the early days of the pandemic are now having magnified effects through the world.
Whether it’s cost or shipping delays, companies have been left scrambling for solutions, especially with the holiday season around the corner.
When looking at end-to-end transit time for U.S. to China ocean freight, transit times went from around 40 days in 2019 to 73 days in 2021 – and increase of around 83%! (source: Freightos)
Economic Implications
Although many companies have been spared from supply chain issues (e.g. software), there’s of all shapes and sizes are feeling the impact. Profitability and growth has been pressured simultaneously in many cases, as companies have experienced higher shipping costs and inventory constraints. Fortunately, container rates have leveled off and port hours are being expanded to help address the issue.
Ultimately, it’s difficult – if not impossible – to predict when issues will subside. As a result, our focus is on the high-quality businesses executing on all fronts, irrespective of short-term headwinds being faced today.
Earlier this week, Capri Holdings reported a strong quarter despite the challenging environment. On the call, management noted that had it not been for supply chain delays, growth would have been even stronger. It’s interesting to think of the businesses today that have been impacted by the global supply chain crunch, and what they will look like down the road once the dust has settled.
Twitter: @_SeanDavid
The author or his firm may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
